How to price your products

In short: Start with all costs per sale (purchase, shipping, fees, advertising, returns). That gives the minimum price for zero profit. Add your target profit and then add VAT.

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The order

  • Collect all variable costs per sale.
  • Calculate the minimum net price.
  • Set target profit or target margin.
  • Derive the gross price from net and VAT.
  • Check the price against competition and value.

Typical mistakes

  • Not including advertising.
  • Forgetting returns.
  • Mixing gross and net.

Frequently asked questions

Should I always undercut competitors?

No. A low price without margin makes advertising impossible. Check your minimum price first.

Work it out with your numbers

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Margin and Profit Calculator

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