Question 1

How do I calculate the selling price for my product?

Accepted Answer

Add your total costs (product + shipping), divide by (1 - target margin as a decimal). For example, with $20 total cost and 40% target margin: $20 ÷ (1 - 0.40) = $33.33 before GST. Then add GST if required.

Question 2

What margin should I target?

Accepted Answer

For e-commerce, aim for 40% or higher profit margins. This provides buffer for marketing costs, returns, and unexpected expenses. Lower margins (20-30%) require higher sales volume to be profitable.

Question 3

Should I include shipping in my product cost?

Accepted Answer

Yes, always include shipping costs when calculating your selling price. If you offer 'free shipping', the shipping cost must be built into your product price. Otherwise, you'll lose money on every sale.

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