How to Price Products for Your Online Store

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Published September 17, 2026 · Updated October 1, 2026

Learn how to price ecommerce products from landed cost, fees, shipping, returns, and profit goals with worked examples and a free calculator.

E-commerce · Pricing · Profit Planning

If you sell products online, start with your cost per order, not a competitor's sticker price. The right price covers product and fulfilment costs, payment fees, returns and marketing per order. Across a realistic number of orders, the remaining contribution must cover monthly overhead, owner pay and a profit target. A price that clears supplier cost alone can still fail this test.

Quick answer: Add order-level costs and choose a contribution target. If non-payment variable costs are $30.75, the illustrative payment fee is 2.9% plus $0.30 and you want a 40% contribution margin, the price is about $54.38: ($30.75 + $0.30) ÷ (1 − 0.029 − 0.40). Check demand and the orders you can fulfil.

How to price an ecommerce product from its order costs

Use this sequence: add landed cost, packaging, pick-and-pack labour, shipping subsidy, returns, order-level marketing, and payment fees. Set a contribution margin target, then check the price against customer demand and the orders your store can fulfil.

Percentage fees make a simple markup unreliable. All USD figures below are illustrative assumptions, not provider quotes or market averages. Check your own rates and order records. Suppose an order has these costs:

• Product landed cost: $18.00
• Packaging: $1.25
• Pick-and-pack labour: $2.00
• Shipping subsidy: $3.50
• Returns allowance: $1.00
• Advertising cost per order: $5.00
• Payment fee: 2.9% of the selling price plus $0.30

The costs other than payment processing total $18 + $1.25 + $2 + $3.50 + $1 + $5 = $30.75. If the target contribution margin is 40%, let the selling price be P. The contribution is P − ($30.75 + 0.029P + $0.30), or 0.971P − $31.05. Set that equal to 40% of the price:

0.971P − $31.05 = 0.40P

0.571P = $31.05

P = $54.38

At $54.38, the payment fee is $1.88 after rounding, total variable cost is $32.63, and contribution is $21.75. Divide $21.75 by $54.38 and the contribution margin is 40.0% after rounding. The direct pricing formula is (non-percentage order costs + flat payment fee) ÷ (1 − percentage payment fee − target contribution margin). Here it is ($30.75 + $0.30) ÷ (1 − 0.029 − 0.40) = $54.38.

That is a price for a 40% contribution target. If competitors charge $39, compare shipping, product cost and advertising before matching them.

Next, calculate the orders needed. If monthly fixed costs are $6,000 and you want $2,000 for owner pay plus $1,000 in profit, the store needs $9,000 of contribution. At $21.75 per order, that is 9,000 ÷ 21.75 = 413.79, so you need 414 orders. At $54.38 each, those orders produce $54.38 × 414 = $22,513.32 in revenue. Contribution, not revenue, covers fixed bills and target pay.

What changes the answer

Landed product cost: include supplier price, inbound freight, duties and preparation before sale.

Shipping terms: include carrier cost even with free shipping. If buyers pay shipping, include both that revenue and the carrier cost.

Fees and acquisition: include percentage and flat payment fees, marketplace commissions and advertising per acquired order.

Returns and discounts: estimate unrecovered refund, return-shipping and replacement costs. Recalculate at the discounted price before a promotion.

Order mix and capacity: a $20 accessory can use almost as much packing time as a $100 bundle. Compare contribution dollars and required order volume by product.

Three worked ecommerce pricing examples

Scenario 1: A low-priced accessory

A phone accessory has a landed cost of $8.00. Packaging is $0.75, fulfilment is $1.50, the average shipping subsidy is $2.75, returns allowance is $0.50, and advertising costs $3.50 per order. The non-payment variable costs total $8 + 0.75 + 1.50 + 2.75 + 0.50 + 3.50 = $17.00.

At a selling price of $29.00, payment processing is ($29 × 0.029) + $0.30 = $1.14 after rounding. Total variable cost is $17.00 + $1.14 = $18.14, so contribution is $29.00 − $18.14 = $10.86. The contribution margin is $10.86 ÷ $29.00 = 37.4%.

If monthly fixed costs are $3,000, owner pay is $2,000, and the profit target is $1,000, required contribution is $6,000. The store needs 6,000 ÷ 10.86 = 552.49, or 553 orders. That means about 553 ÷ 26 = 21.3 orders per selling day on a 26-day month. Being above product cost is not enough; required daily volume is the test. If the price falls to $25 with the same order costs, the fee is $1.03 after rounding, contribution is $25 − $17 − $1.03 = $6.97, and the same $6,000 target takes 6,000 ÷ 6.97 = 860.83, or 861 orders. The $4 discount therefore requires 308 more orders than the $29 price, assuming demand and costs otherwise stay the same.

Scenario 2: A higher-priced bundle

A skincare bundle costs $42.00 landed. Packaging is $1.50, fulfilment is $3.00, shipping subsidy is $6.00, returns allowance is $2.00, and advertising is $8.00 per order. Those costs total $42 + $1.50 + $3 + $6 + $2 + $8 = $62.50 before payment processing.

At $119.00, the payment fee is ($119 × 0.029) + $0.30 = $3.75 after rounding. Total variable cost is $62.50 + $3.75 = $66.25; contribution is $119 − $66.25 = $52.75, and contribution margin is $52.75 ÷ $119 = 44.3%.

With $9,000 in monthly fixed costs, $3,500 of owner pay, and a $2,500 profit target, required contribution is $15,000. The order requirement is 15,000 ÷ 52.75 = 284.36, so it needs 285 orders. Revenue at that volume is $119 × 285 = $33,915. If the bundle were priced at $99, the payment fee would be $3.17, contribution would be $99 − ($62.50 + $3.17) = $33.33, and the same target would require 15,000 ÷ 33.33 = 450.05, or 451 orders. The $20 cut adds 166 monthly orders.

Scenario 3: A subscription-style replenishment product

A replenishment box costs $16.00 landed. Packaging is $1.00, fulfilment is $2.25, shipping is $4.25, expected refunds and replacements are $1.25, and retention marketing allocated to each renewal is $2.00. The non-payment total is $16 + $1 + $2.25 + $4.25 + $1.25 + $2 = $26.75.

At $59.00, the payment fee is ($59 × 0.029) + $0.30 = $2.01 after rounding. Total variable cost is $28.76; contribution is $30.24, and contribution margin is $30.24 ÷ $59 = 51.3%. If fixed costs and target owner pay together require $8,000 of monthly contribution, required renewals are 8,000 ÷ 30.24 = 264.55, or 265 renewals.

If 10% of billed subscriptions fail or cancel before renewal, 265 successful renewals require roughly 265 ÷ 0.90 = 294.45, so plan for at least 295 renewal opportunities to obtain 265 successful renewals under that assumed 90% success rate. That does not tell you how many new customers to acquire: also measure cancellations, failed payments, and first-order conversions separately.

A minimum price is different from a sustainable price

A price that covers one order's variable costs creates no contribution for rent, software, owner pay or profit. Calculate that direct-cost floor separately from the contribution target. Every amount below is an invented USD input, including the fee assumption; it is not a payment-provider quote.

Suppose non-payment order costs total $24 and payment processing is 3% of price plus $0.30. Contribution is 0.97 × price − $24.30. Setting that amount to zero gives a direct-cost floor of $24.30 ÷ 0.97 = $25.0515, or $25.06 rounded up. At that price, contribution is only about one cent. Calling it a sustainable retail price would ignore the monthly business costs.

For a 35% contribution margin, price is $24.30 ÷ (1 − 0.03 − 0.35) = $39.1935, rounded up to $39.20. The fee is $1.476 before cent rounding, so contribution is $13.724, or 35.01% of price. With $3,000 monthly fixed costs and a separate $1,000 profit target, required contribution is $4,000. Using the unrounded $13.724 contribution, you need 292 orders: 291 produces $3,993.684, while 292 produces $4,007.408. If you round each transaction cost to cents in your accounts, use the resulting consistent per-order amount when planning.

At $35, the same $4,000 requirement needs 4,000 ÷ 9.65 = 414.51, rounded up to 415 orders. If packing takes 12 minutes per order and only 70 productive hours are available, capacity is 70 ÷ 0.2 = 350 orders. The discounted plan exceeds that capacity by 65 orders.

Use the discount recovery guide to preserve a baseline result, and the contribution versus profit margin comparison to avoid calling the contribution target net profit. A markup on landed product cost cannot answer these questions without fees, delivery costs, monthly overhead and capacity.

How to run your own numbers

In the ecommerce quick model, enter the actual order price (including shipping charged to the buyer) and product cost. Put packing labour in direct labour; put shipping costs, expected returns and flat transaction fees in other variable costs. Enter acquisition cost per order and percentage fees in their own fields. Add monthly overhead, owner pay and profit target once each. For a promotion, change the order price. Compare required orders with demand and packing capacity. The quick model displays USD; the full calculator supports other currencies. Run your assumptions in the ecommerce break-even calculator.

The SBA break-even guide explains the unit formula; Shopify’s pricing guide illustrates percentage and flat fees. Check your own fee schedule. For other topics, visit the MyBreakeven blogs hub. These are planning estimates, not forecasts.

Common mistakes

Using supplier cost as the whole variable cost. The missing lines are usually fulfilment, shipping, fees, returns, and advertising. Add them per order before you decide that a product has a healthy margin.

Applying a markup to a price that includes percentage fees. A 50% markup on cost does not mean a 50% contribution margin. Percentage fees rise with the price, so solve for the price after including them.

Treating free shipping as free. The customer may see $0 at checkout, but the carrier still invoices you. Put the average shipping subsidy in the order cost.

Ignoring the discount version of the offer. A product can work at $60 and fail at $45 during a promotion. Recalculate contribution at the actual sale price, then check whether the extra volume would really cover the lost dollars per order.

Blending first orders and repeat orders. Acquisition cost is often concentrated on the first purchase. If repeat buyers cost less to acquire, calculate first-order contribution separately and avoid using a blended average that hides an unprofitable entry offer.

Pricing every product with one percentage markup. Bulky, fragile, low-priced, and high-return products consume different resources. Price by order economics instead.

Key takeaways

• Build the price from landed cost and every cost that rises with an order, including shipping, returns and acquisition.
• Solve percentage fees and your contribution target together; a markup on supplier cost does not give the same margin.
• Test the required whole-order volume at full price and at every proposed promotion price.
• Use your own payment terms, order mix and capacity; the worked figures are illustrative assumptions.

FAQs

Should I price from cost or from competitors?

Start from cost so you know the minimum economics of the order. Then use competitor prices to test positioning, features, shipping terms, and customer expectations; a competitor's price is context, not proof that your costs are covered.

What contribution margin should an ecommerce store target?

There is no universal target because fulfilment, advertising, repeat purchase rate, and fixed costs differ. Choose a margin that covers your monthly contribution requirement at a plausible order volume, then test the result against demand and capacity.

Do I include my own salary in product pricing?

Yes, if the store is expected to pay you. Add the monthly owner salary to fixed costs when calculating required contribution; otherwise the model can show a profit while your labour remains unpaid.

How should I price when customers pay shipping?

Separate the shipping charge from the product price in your model. Include the shipping revenue and the carrier cost, plus any difference you absorb, so the order's contribution reflects what actually reaches your bank account.

Should discounts come out of margin or marketing budget?

Either treatment can be useful, but the arithmetic must be visible. Model the discounted selling price as the price the customer pays, then include the campaign's advertising and fulfilment costs; do not label the discount as marketing while leaving the lower revenue out of the calculation.

How often should I recalculate prices?

Recalculate when supplier costs, carrier rates, fees, ad costs, or return rates change. A monthly review is sensible for a growing store, while a promotion or supplier change deserves a fresh calculation before it goes live.