Guide
How to price a product
Pricing is one of the few levers that moves profit directly, yet most sellers set a number once and forget it. Here's how to price a product on purpose: find your true per-unit cost, pick a method, set a margin you want to keep, and test your way to a price that holds up as costs move.
1. Know your true per-unit cost
Add up everything one sale really costs: the cost of goods, platform and payment fees, shipping and packaging, and the ad spend it took to win that order. This is your landed per-unit cost, and it's almost always higher than the sticker on the product itself.
2. Pick a pricing method
Cost-plus adds a fixed markup to your per-unit cost and is quick to set. Value-based prices to what the outcome is worth to the buyer, not what it cost you. Competitor-informed checks the going rate so you're not far above or below the market. Most sellers blend all three.
3. Set a target margin
Decide the net margin you want to keep after every cost, not just a markup over COGS. Work backward from that target to a price. A margin target keeps weak products honest and makes it obvious when a price no longer clears the bar.
4. Test price changes
Move the price on one product, hold everything else steady, and watch units sold and margin together for a couple of weeks. A higher price with slightly fewer orders can still leave more money in your pocket. Change one thing at a time so you know what moved the result.
5. Recheck margin as costs change
Supplier prices, ad costs, and shipping all drift over time, and a price that was healthy last quarter can quietly slip underwater. Revisit each product's margin on a schedule and adjust the price before a winner turns into a loss.
A worked example
Say one unit costs $12 to buy, plus $2 in platform and payment fees, $3 in shipping and packaging, and about $4 in ad spend to win the sale. That's a true per-unit cost of $21. With cost-plus and a 60 percent markup, you'd list it at roughly $34, leaving about $13 per sale, a net margin near 38 percent. Price only off the $12 product cost and the same markup would land near $19, below what the sale actually costs you. These numbers are illustrative, but the gap is the point.
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Start freeFAQ
How do I price a product for profit?
Start from your true per-unit cost, which includes COGS, platform and payment fees, shipping and packaging, and the ad spend per order. Then add the markup or set the price that leaves the net margin you want to keep after all of those costs. Pricing only from the product's cost alone is what quietly erases margin.
What is cost-plus pricing?
Cost-plus pricing takes your per-unit cost and adds a set markup to reach the price. If a unit costs you $18 all in and you want a 50 percent markup, you sell at $27. It's simple and fast, but it ignores what buyers will actually pay, so it works best alongside a competitor and value check.
Should I match my competitors' prices?
Use competitor prices as a reference point, not a rule. They tell you the range buyers expect, but they don't know your costs or your margin target. If matching a competitor would put a product below your target margin, that's a signal to cut costs or differentiate, not to sell at a loss.
How often should I review my prices?
Review on a regular cadence, such as monthly or quarterly, and any time a major cost moves, like a supplier increase or a jump in ad costs. The goal is to catch a margin slipping before it turns negative, rather than discovering months later that a popular product was losing money.