A selling price can look profitable until marketplace commission, payment charges, discounts, packaging, and returns are deducted. The safest approach is to work backward from the profit you want rather than adding a percentage to product cost.
Start with the full cost per order
Include the product cost, packaging, shipping paid by you, payment charges, and a realistic allowance for returns or damage. Keep fixed monthly costs separate unless you deliberately allocate them per order.
Formula when the platform fee is a percentage
If C is the fixed cost per order, P is the target profit, and f is the fee rate as a decimal, the minimum selling price before any customer discount is:
Selling price = (C + P) ÷ (1 − f)
Worked example
Suppose the product and fulfilment cost ₹600, the marketplace keeps 15%, and you want ₹150 profit. The minimum net selling price is (₹600 + ₹150) ÷ 0.85 = ₹882.35. If you plan a 10% coupon, the displayed price must be ₹882.35 ÷ 0.90 = ₹980.39. Rounding the listing to ₹999 gives a small buffer.
How to test a proposed price
- Apply the customer discount first.
- Calculate percentage fees on the amount the platform actually uses.
- Subtract fixed costs and taxes that you bear.
- Compare the remaining profit with your target.
Use the Discount Calculator to verify single or successive discounts, and the Percentage Calculator for commission and margin checks.
Common pricing mistakes
- Treating markup and margin as the same percentage.
- Calculating commission on the wrong price base.
- Ignoring payment, fulfilment, or return costs.
- Offering a coupon without rebuilding the minimum displayed price.
Decision checklist
Before listing, verify the platform’s current fee schedule, whether fees include tax, who pays shipping, how returns are charged, and the lowest promotional price you will accept. Platform rules change, so use the current seller agreement rather than an old screenshot.
Frequently asked questions
Should GST be counted as profit?
No. Tax collected for remittance is not operating profit. Separate tax from revenue before comparing margins.
Why divide by one minus the fee?
Because the fee is deducted from the selling price, not added to your cost. Dividing solves for the price that leaves the desired amount after the deduction.
Can I use average return cost?
Yes. Estimate expected return cost per order from recent data, then review it regularly by product category.
Run a fee-and-discount stress test
Marketplace pricing should be tested under normal, promotion and downside conditions. In the promotion case, apply the customer discount before calculating percentage-based commission if that matches the platform rule. In the downside case, add a conservative return allowance and any higher fulfilment charge.
Record the displayed price, final customer price, platform deductions, order-level costs and net profit in separate columns. This makes it easier to identify whether a weak result comes from the discount, the commission rate or an overlooked fixed charge. Recheck the fee schedule before every major campaign because platforms may change both rates and calculation bases.