How to Calculate Selling Price
Most pricing mistakes come from working forward from cost with a rough markup instead of working backward from a target margin — the difference sounds subtle but changes the actual number you land on.
By Marginory team · Online sellers with hands-on experience across Etsy, Shopify & PODUpdated Fee data verified against official platform documentation
The backward pricing formula
Price = Total cost ÷ (1 − Target margin %)
"Total cost" should include everything that comes out of the sale before profit — product cost, platform fee, shipping you absorb, and packaging. Leaving any of these out means your actual margin will land below your target, sometimes significantly.
Worked example
Product cost $12, platform fee 10%, shipping absorbed $2, target margin 25%:
Why a flat markup falls short
If you instead add a flat 25% markup to the $14 cost, you get $17.50. After the 10% platform fee ($1.75), your actual margin drops to roughly 20%, not the 25% you were aiming for. The gap between markup-based and margin-based pricing grows as the fee percentage grows — which is exactly why platforms with higher combined fees (marketplaces with affiliate commission on top, for example) punish markup-only pricing the hardest.
Sanity-checking your result
Once you have a price, verify it against a competitive check — is it in line with what similar products sell for in your niche? If the formula produces a price well above market rate, you may need to either reduce your cost inputs, accept a lower target margin, or confirm the product has enough differentiation to support a premium.