Selling at 100 a product that costs you 40, between commission, fixed fee, shipping and other costs you keep 36: a margin of 36 %, not the 60 % that subtracting the cost from the price suggests.
A product's apparent margin on a marketplace has little to do with the real one. Between the price and what you receive sit a percentage commission, often a fixed fee per sale, the shipping, and a tail of costs almost nobody adds up: storage, returns and on-platform advertising.
How to work it out by hand
Start from the price you sell at
Subtract the cost of the product
Subtract the platform's commission, percentage plus fixed fee
Subtract the shipping and the rest of the costs tied to the sale
What is worth knowing
The calculation almost nobody does before setting a price is the reverse one: from the cost and the fees, what price gets you to a given margin. It is not a matter of adding the margin to the cost, because the commission applies to the final price and rises with it: you have to divide by one minus the percentage. At 15 % commission, hitting a 20 % margin on a product costing 40 means selling well above what intuition suggests. And watch the returns: in categories like clothing they exceed 20 %, and many platforms do not refund the commission.
Frequently asked questions
Why is my real margin so low?
Because between price and cost sit the commission, the fixed fee, the shipping and the storage and returns costs. Together they usually take more than half of what looked like margin.
How do I set a price for a target margin?
Not by adding the margin to the cost. Since the commission rises with the price, divide the fixed costs by one minus the sum of commission and target margin.
What commission should I enter?
The one for your category, which is in your seller dashboard. They vary a great deal between categories on the same platform.
Should I count returns?
Yes, under other costs: multiply the cost of one return by the rate you expect. In high-return categories it is what decides whether the product is profitable.
Cookies
We use our own cookies to remember your preferences: country, number format and the calculators you use most. Analytics and advertising cookies are only switched on if you accept them. More information.