Cost-plus pricing (cost × 3) fails in both directions: it loses money on cheap items where fixed fees dominate, and prices you out of the market on expensive ones where percentage fees dominate.
Start from landed cost
Landed cost means product, freight, duty, tax, packaging, and any per-order handling — divided by units actually received. Everything downstream depends on this number being honest, including units lost to damage.
Subtract the real costs
| Cost | Behaviour |
|---|---|
| Platform commission | Percentage of price |
| Payment processing | Percentage plus a fixed fee per order |
| Fulfilment | Per order, plus packaging |
| Advertising | Per order acquired; use your actual cost per acquisition |
| Returns | Rate × loss per return |
What remains is contribution profit. Express it as a percentage of price so you can compare products of different prices.
Two prices, not one
- Minimum price — never sell below this.
- List price — leaves room for promotions.
If both are the same number, your first discount sells at a loss.
Review monthly
Re-run the model with actual ad spend and actual return rate. If real profit is far below the estimate, find which line item moved rather than adjusting the price to hide it.
Model it in Margin Planner, compute landed cost in Landed Cost Calculator, and size a return in Refund Loss Calculator.
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