A common story: a new seller is busy with orders, but the bank balance does not grow. The reason is usually pricing — some costs were never counted. Here is a simple way to price products for your online store so each order actually makes money.
Step 1: List every cost of one order
- Product cost — what you pay to make or buy it.
- Packing — box, pouch, tape, filler, label.
- Shipping — the courier charge for the packed weight and zone.
- Payment gateway fee — usually around 2% of the order value for UPI and cards.
- COD charges — if the courier charges extra for cash on delivery.
- Returns — an average cost per order for parcels that come back.
- Ads — your ad spend divided by the number of orders it brings.
GST is added on top of your price (if you are registered) and paid to the government, so keep it separate from your margin.
Step 2: Estimate returns honestly
If 10 out of 100 COD parcels come back, you pay shipping both ways on those 10. Spread that cost over all 100 orders. Fashion and footwear usually have more returns than food or books.
Step 3: Use a simple formula
Selling price = (all fixed costs per order) ÷ (1 − gateway % − your target margin %)
Example: product ₹300 + packing ₹20 + shipping ₹60 + returns ₹20 = ₹400 of fixed costs. Gateway fee 2%, target margin 30%.
₹400 ÷ (1 − 0.02 − 0.30) = ₹400 ÷ 0.68 = about ₹588. You might round it to ₹599.
At ₹599, the gateway takes about ₹12, your costs are ₹400, and you keep about ₹187 — roughly 31%.
Step 4: Check the market, then decide
Compare with similar products. If yours is much higher, look for ways to cut costs — lighter packing, a smaller box, a free-shipping limit that raises order size. If yours is much lower, you may be underpricing good work.
Healthy margins by category
- Fashion and footwear: aim higher, because returns are common.
- Home decor and handmade goods: medium to high.
- Food and daily items: lower margins, but more repeat orders.
Common pricing mistakes
- Forgetting packing and gateway fees.
- Offering free shipping on every order, even tiny ones.
- Big discounts that go below cost.
- Never raising prices when costs go up.
Review every three months
Courier rates, material costs and return rates change. Recheck your numbers every quarter and adjust.
Our online stores let you set prices, coupons and shipping rules with a free-delivery limit, and show every order in one admin panel. There is no commission on sales. See online store plans from a one-time ₹4,990, or read how to set shipping charges.
Sources: 2026 ecommerce pricing guides for Indian sellers. Figures are examples; use your own costs.
FAQs
How do I calculate the selling price of a product?
Add product, packing, shipping and average return costs, then divide by (1 − payment gateway % − target margin %).
What costs do new online sellers often forget?
Packing, payment gateway fees, COD charges, returns and ad spend per order.
Should GST be counted as part of my margin?
No. If you are registered, GST is collected on top of your price and paid to the government.
How often should I review my prices?
Every three months, or whenever courier rates or material costs change.
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