A step-by-step framework for pricing products after manufacturing, delivery and selling fees. This guide offers a practical starting point, not a substitute for specialist advice.
1. Start with your true unit cost
List materials, packaging, production labour, payment processing, delivery subsidies and refunds. For physical goods, divide batch-level costs by the number of saleable items. A product that costs £2 to make may cost more than £5 to fulfil once fees, packaging and shipping have been counted.
2. Choose margin or markup deliberately
Markup is measured against cost; margin is measured against selling price. If a product costs £10 and sells for £15, markup is 50% but gross margin is 33.3%. Set a target *margin* if the objective is to keep a percentage of selling price after costs.
3. Account for marketplace deductions
Online marketplaces often charge percentage fees, fixed transaction fees, advertising fees and may calculate fees on tax or postage. Enter current charges into a seller-profit calculator rather than assuming one universal rate.
4. Test several price points
Start with a cost floor, then assess competitors, customer alternatives and product differentiation. Test a higher price on a sample listing. Monitor conversion rate and actual contribution margin, not just revenue.
5. Review after a real sales batch
Compare forecast and actual postage, returns and manufacturing times. If a price sells well but leaves too little profit, improve production or raise prices rather than increasing volume blindly.
Put it into practice
Use the tools below with numbers from your own business, then revise your assumptions against real results. Keep a record of the decisions you make and why.