How to Price a Product: Margin, Markup and Fees

October 31, 2026

Pricing & Profit Margin Calculator Excel template
Pricing & Profit Margin Calculator Excel templatePricing & Profit Margin Calculator

Pricing is where many small businesses quietly lose money: the price “looks right”, but after materials, packaging, shipping and platform fees, there’s little left. Here’s a simple way to price from your real costs.

Step 1: Find the real cost per unit

Add everything you spend to make and deliver one unit:

  • materials or wholesale cost;
  • packaging;
  • shipping you pay (if not charged to the customer);
  • per-order supplies (labels, inserts).

Then account for percentage fees: marketplace commissions, payment processing, ads per sale. A 6.5% fee on a $24 product is $1.56 — real money.

Step 2: Margin vs markup

These are not the same:

  • Margin = profit ÷ price
  • Markup = profit ÷ cost

A product that costs $10 and sells for $20 has a 50% margin and a 100% markup. Mixing them up leads to underpricing.

Step 3: Price for a target margin

If you want a given margin after percentage fees:

Price = cost ÷ (1 − fee % − target margin)

Example: cost $12 (product + shipping), fees 6.5%, target margin 45% → $12 ÷ (1 − 0.065 − 0.45) = $24.74. Round to a nice price like $24.99.

Step 4: Compare products

Put all your products in one table: cost, fees, price, profit, margin. You’ll usually find a few products with excellent margins and a few that barely break even. Options for the weak ones: raise the price, bundle them, reduce cost, or drop them.

Step 5: Sanity-check the market

Cost-based pricing gives you the minimum. Then look at competitors and the value you offer. If customers happily pay more, charge more — and if your price is far above the market, find a cheaper way to make the product or a better way to explain its value.

Margins to aim for

It depends on the business, but handmade and digital products often aim for 50%+ gross margin, retail for 30–50%. Below 30%, any increase in costs or fees can wipe out your profit.

Template

The Pricing & Profit Margin Calculator shows cost, fees, profit, margin and markup for up to 20 products with color alerts and a chart, plus a calculator for the price that gives your target margin. Then check volume with the Break-Even Analysis.

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