You buy a product for $10 and pay $5 to ship it. The marketplace takes 10%, the payment processor takes 3%, and there is a 30 cent fee per order. What price keeps 30% of the sale as profit?
It's $26.84. Not $25, and not $19.50, which is what you get if you add 30% to your $15 cost. The formula is short, and once you have it you can price anything.
The fee rates in this guide are examples I picked to show the method. Use the rates from your own platform.
What is the formula?
Put the costs that stay the same on top, and the share of each dollar that fees and profit take on the bottom.
Price = (Cost + Shipping + Fixed fees) / (1 - Percentage fees - Target margin)
For the example: (10 + 5 + 0.30) / (1 - 0.13 - 0.30) = 15.30 / 0.57 = $26.84.
Check it. At $26.84 the percentage fees are $3.49, plus the 30 cents, so fees come to $3.79. Take that and your $15 cost off the price and $8.05 is left. That is 30.0% of $26.84.
Why not just add 30% to my cost?
Because the fees take a slice of every dollar you charge, including the extra dollars you add. Margin is also a share of the price, not of your cost.
Try it. Your cost is $15, and adding 30% gives $19.50. The fees on $19.50 are $2.54 for the percentages and 30 cents flat, so $2.84. You keep $19.50 - $15 - $2.84 = $1.66. That is an 8.5% margin, not 30%.
If that mix-up looks familiar, I wrote a separate guide on it: margin vs markup.
What price do I need for other margins?
Same costs and fees as above. I ran each one through the calculator.
| Margin you want | Price to charge | You keep (about) |
|---|---|---|
| Break-even (0%) | $17.59 | $0.00 |
| 10% | $19.87 | $1.99 |
| 20% | $22.84 | $4.57 |
| 30% | $26.84 | $8.05 |
| 40% | $32.55 | $13.02 |
Look at the steps between rows. Going from 10% to 20% costs you $2.97 more on the price. From 20% to 30% it's $4.00. From 30% to 40% it's $5.71. Each extra margin point costs more than the last, because fees and margin together eat more of every dollar.
What if buyers won't pay that price?
The formula tells you what you need. It can't tell you what buyers will pay. Look at what similar listings sell for first.
If your number is too high, there are only a few things to change:
- Lower the margin you aim for, and see what the table says.
- Cut your cost or shipping. A $1 saving on shipping moves the price by about $1.75 here, because you also stop paying fees on that dollar.
- Check the fee rates. A platform with a lower percentage can change the price a lot.
- Sell bundles. The 30 cent fixed fee is spread over more items.
Which fees go where?
Anything that is a percentage of the price goes on the bottom: commission, payment processing, and tax withheld as a percentage. Anything that is a fixed amount goes on top: your product cost, shipping, a per-order fee, and any ad cost you spread over each order.
One thing to watch. Some platforms also charge their percentage on shipping you collect from the buyer. This simple formula assumes the percentage applies only to the price, so check how your platform charges before you rely on it.
For real rates, I keep dated guides for Daraz, TikTok Shop and Stripe and PayPal.
How do I check my own numbers?
- Open the multi-platform calculator.
- Type your product cost, shipping, commission, payment fee and flat fee.
- Set the target net margin field to 30.
- Read the suggested price under the results.
That is the same formula as above, so it should match your hand sum.
Can I do this in a spreadsheet?
Yes. Put your cost in A2, shipping in B2, the fixed fee in C2, the percentage fees as one number in D2 (13% is 0.13), and your target margin in E2 (0.30). Then the price is:
=(A2+B2+C2)/(1-D2-E2)
With the example numbers, that returns 26.84. Keep the percentages as decimals, or the sum will not work.
Who is writing this?
I'm Saqib, the developer behind PayoutCalc. I haven't run an online shop. The method here is arithmetic that you can check yourself, and every number was run through the calculators. If you spot a mistake, tell me and I'll fix it.