How to price your products for profit (with a simple formula)
Learn the simple formula small shops use to price products for real profit after fees, packaging and shipping — with worked examples.
1. Know your full cost per unit
Add the cost of the product or materials, plus packaging and any shipping you pay for. A $6.50 T-shirt with $1.20 of bag and label really costs you $7.70.
2. Include the fees you pay on every sale
Card machines, marketplaces and payment apps take a percentage of each sale, often 2–5%. That percentage comes out of your price, so it must be built in.
3. Choose the margin you want
Margin is the share of the price you keep as profit. Many small shops aim for 40–60% on handmade or branded goods and less on resold items. Pick a target before you pick a price.
4. Use the formula
Price = (cost + packaging) ÷ (1 − fee % − margin %). Example: ($6.50 + $1.20) ÷ (1 − 0.03 − 0.50) = $16.38, so a price of $16.50 or $17 gives you about 50% margin after fees.
5. Check your break-even and round sensibly
Your break-even price is (cost + packaging) ÷ (1 − fee %). Never sell below it. Then round to a price that feels natural to your customers, and check the profit again.
Make it easier
The pricing calculator in our Small Shop Business Kit does this formula for every product, shows your profit per unit at any price you choose and warns you when a price loses money.