How to price your products without losing money or customers

Pricing seems simple: cost plus margin. But every week I see stores that sell well and lose money because they didn't include all the costs. Or stores with great products that don't sell because the price makes no sense to the customer.

Your price communicates just as much as the photo and the description. Let's break it down.

What it really costs you to sell a product

Before setting a price, you need to know your true cost per unit sold. Not just the product cost:

• Product cost (purchase or manufacturing).
• Shipping from supplier to you (or import costs).
• Packaging: box, tissue paper, stickers, tape.
• Payment gateway fee: typically 2.5-4.5% depending on your processor.
• Platform commission: if you're on a marketplace, add 10-20%.
• Shipping to customer (if you offer free shipping, this cost is on you).
• Sales tax: don't forget to factor it in.

Item	Example ($)
Product	5.00
Supplier shipping	0.50
Packaging	0.30
Payment fee (3%)	0.35
Shipping (if free)	3.50
True cost	9.65

If you sell that product for $12.00, your real margin is $2.35 -- not the $7.00 it seemed like at first. That difference breaks businesses.

Three strategies that work for small stores

1. Margin on true cost

Calculate your true cost (all the items above) and apply the margin you need. For physical products, aim for at least 40-50% gross margin. Anything less and one unexpected cost wipes out your profit.

2. Anchor pricing

Show a "before" price (reference or list price) next to the current price. It works because the customer evaluates price relative to another number, not in absolute terms. Note: the anchor price must be real and justifiable.

3. Bundles or packs

Two products together at a lower price than buying them separately. It increases average order value and moves slow inventory. A classic that still works.

Common pricing mistakes

• Copying a competitor's price without knowing their costs. Maybe they import directly or buy in volume you don't have.
• Not reviewing prices every 3 months. Costs change, exchange rates shift. Your pricing should adjust accordingly.
• Being afraid of a high price. If your product is better or your service includes a warranty, premium packaging, or personalized support, charge for it. Competing on price alone is a race to the bottom.
• Not factoring in shipping. "Free shipping over $30" sounds great, but if your average order is $15, you're subsidizing deliveries all day long.

An exercise for this week

Take your 3 best-selling products. Calculate the true cost including EVERYTHING (payment fees, shipping, packaging, tax). Look at the margin you're left with. If it's less than 35%, you need to adjust something: the price, the supplier, the packaging, or your shipping model.

Better to know now than after 6 months of "good sales" that left no profit.