Free tool · drag the sliders

Product pricing calculator: the price that still makes money after ads

Most pricing calculators stop at product cost. Online, getting the customer is often the biggest cost. Move the sliders and see the price you need, your margin, what bigger orders do, and where every dollar goes.

Your product
What the customer pays for one item
$
What one item costs you
$
Average. Bundles and add-ons raise it
×
What you pay, once per order
$
Getting customers
Ad spend ÷ new customers
$
1 = they buy once. Many stores see 1.2–1.5
×
Leaks
Codes, sales
%
Share of revenue refunded
%
Profit margin you want

Start at 40%: when you scale, each customer costs more and margin usually falls to about 20%. Margin is after product, shipping, fees, refunds and ads, before team, apps and rent.

Every business starts somewhere

A thin margin today is a list of things to fix.

Few stores get their price right on day one. Small changes, one after another, add up. Here is what they do to your numbers. Move the sliders above to try your own.

StepOrder valueMarginProfit / order
Price for each profit marginsame costs, tap a row to try it
Profit marginPrice per itemOrder valueProfit / orderMarkup
What to do nextfrom your numbers

    How to price a product so it makes money after ads

    A price has to pay for the product, getting it to the customer, the payment, and the customer: the ads that brought them in. Shipping and the cost of getting the customer are paid once per order, so the more items in an order, the less each item has to carry.

    Price per item = (items × product cost + shipping + cost per customer ÷ orders per customer) ÷ (items × (1 − discount) × ((1 − refunds) × (1 − target margin) − 3% fees))

    The example the calculator opens with: a $30 product, $8 shipping, a $40 cost per customer, customers who order 1.5 times a year, 10% average discount and 5% refunds.

    Costs per order (1 item)$30 + $8 + $40 ÷ 1.5$64.67
    Break-even price0% margin$78.10
    Price for a 20% marginwhat's left at scale$98.43
    Price for a 40% marginwhere to start$133.06
    At $85, 1 item per ordermargin8%
    At $85, 1.3 items per ordermargin19%

    Same price, same product. Getting the average order from 1 to 1.3 items (a bundle, a second item at a small discount, a free-shipping threshold) more than doubles the margin, because shipping and ads are paid once per order.

    What profit margin should you aim for? Start at 40%

    Here margin means what's left after product, shipping, payment fees, discounts, refunds and ads, before your team, apps and rent.

    Start at 40%. When you scale, you spend more on ads and reach colder audiences, so each new customer costs more. Margin goes down. Brands that start at 40% usually end up around 20% at scale, which still pays the team and leaves profit. Brands that start at 20% often end up at zero.

    With the example numbers, a 40% price ($133) keeps the margin above 20% until a customer costs about $74 instead of $40. That's how much room you have to grow your ad spend.

    • Under 10%: thin. One bad month of ads and you're losing money.
    • 20%: a healthy place to land once you've scaled.
    • 40%: where to start, so there's room for your cost per customer to rise.

    Why markup rules don't work for online stores

    "Charge 2× or 3× your product cost" comes from retail, where the shop window brought the customers in. Online, you pay for every customer. A $40 cost per customer on an $85 order is almost half the price before you've paid for the product.

    Should you raise your price?

    Usually the answer is to test it. A 10% higher price on a thin margin can double the profit per order, so you can lose a lot of orders and still come out ahead. Then A/B test the higher price on part of your traffic and compare revenue per visitor.

    Frequently asked questions

    How do I calculate the price of a product?

    Add up what one order costs you: the product, shipping and packaging, payment fees, and the ads it took to get the customer (cost per customer ÷ orders per customer). Then divide by what is left of each dollar after discounts, refunds and the profit margin you want. The calculator does it as you move the sliders.

    What profit margin should I aim for when scaling?

    Start at about 40%, measured after product, shipping, fees and ads (before team, apps and rent). As you scale, you reach colder audiences and each new customer costs more, so the margin falls. Starting at 40% usually leaves around 20% at scale, which still pays fixed costs and leaves profit. Starting at 20% often leaves nothing.

    Why should marketing cost be part of my price?

    Because for most online stores it is the biggest cost after the product. If it takes $40 of ads to get a customer who buys 1.5 times, $27 of every order pays for ads. A price set only on product cost (2× or 3× markup) can look healthy and still lose money once ads are paid.

    How does average order value (AOV) change my price?

    Shipping and the cost of getting the customer are paid once per order, not per item. If customers buy 1.3 items instead of 1, those costs are spread over more products, so you can keep a lower price at the same margin. In the example, $85 goes from an 8% to a 19% margin when the average order goes from 1 to 1.3 items.

    What is the maximum CAC I can afford?

    Everything all of a customer's orders leave you before ads. If one order leaves $32 before ads and customers order 1.5 times, you can pay up to about $49 per customer and break even, but only $32 if you want the first order to pay for itself.

    Will raising my price lose me customers?

    Some, usually fewer than you fear. The calculator shows how many orders you could lose after a 10% price increase and still make the same profit. Don't guess: A/B test the new price on part of your visitors and compare revenue per visitor.

    More free calculators

    See all calculators →
    Am I making money?Shopify profit calculatorHow much should I spend on ads?Marketing budget calculatorWhy aren't my ads profitable?ROAS calculatorIs my conversion rate good enough?Break-even conversion rate calculator

    How to unlock 25% more revenue from your existing traffic.

    Watch the free training

    A planning tool, not financial or tax advice. Payment fees are counted at 3%. Margin is profit as a share of revenue after discounts and refunds, before fixed costs and tax. Nothing you enter leaves your browser.