How to calculate a target selling price with shipping and fees
By the TrueSellerPrice team · Updated · How we calculate
A target selling price is the price at which a sale leaves the profit or margin you aim for after every cost. Shipping complicates it in two ways: you pay the carrier, and the shipping you charge the buyer is often included in the amount that fees are calculated on. This guide walks through the method step by step.
1. List every cost per unit
Write down what one sale costs you regardless of price: product or materials, packaging, the postage you pay, and any fixed fee per listing or per order. Include costs you pay per period (subscriptions, tools) by dividing them by the units you sell in that period.
2. Find out what each fee is charged on
This is where most hand calculations go wrong. Fees are not all charged on the item price:
- Item price only: some commissions apply only to the item.
- Item plus shipping: Etsy's transaction fee and Amazon's referral fee include the shipping the buyer pays.
- Total including tax: payment processing and eBay's final value fee are charged on everything the buyer pays.
- Fixed per order: listing fees, per-order fees and the fixed part of card processing.
3. Decide your target
Choose either a margin (profit as a percentage of the price) or a profit per unit. A margin scales with the price; a fixed profit is easier to relate to your time. Pick one to solve for.
4. Solve for the price
If every percentage fee were charged on the item price alone, the formula would be: price = (fixed costs + target profit) ÷ (1 − percentage fees), or for a margin, fixed costs ÷ (1 − margin − percentage fees). When fees also apply to the shipping you charge, part of that shipping charge goes to fees as well, which lowers what it contributes towards your costs. The calculator handles each fee on its own base.
Illustrative inputs, not a quote from any platform. Calculated with the same engine as the calculator above.
- Materials
- $9.00
- Packaging
- $1.20
- Postage paid
- $5.50
- Shipping charged to buyer
- $4.99
- Listing fee per sale
- $0.20
- Transaction fee (item + shipping)
- 6.5%
- Payment processing (total)
- 3% + $0.25
- Target margin
- 25%
| List price | $19.67 |
| Shipping charged to customer | $4.99 |
| Customer pays (incl. tax) | $24.66 |
| Indirect tax collected for authorities VAT / GST / sales tax — not seller revenue | $0.00 |
| Net revenue | $24.66 |
| Listing fee per sale Marketplace / referral · fixed per order | −$0.20 |
| Transaction fee Marketplace / referral · 6.5% of order total excl. tax (24.66) | −$1.60 |
| Payment processing rate Payment processing · 3% of order total incl. tax (24.66) | −$0.74 |
| Payment processing fixed fee Payment processing · fixed per order | −$0.25 |
| Product cost 9.00 USD per unit | −$9.00 |
| Packaging 1.20 USD per unit | −$1.20 |
| Outbound shipping 5.50 USD per unit | −$5.50 |
| Contribution profit Contribution margin 25.01% | $6.17 |
| Profit after allocated overhead | $6.17 |
| Margin | 25.01% |
| Markup on total cost | 33.35% |
5. Check the result against your minimum and the market
Before publishing the price, compare it with your break-even price ($12.86 in the example) so you know how much room you have for discounts, and with what competitors charge for the same item, including their shipping.
You can do all of this in the target profit price calculator or a platform calculator such as the Etsy pricing tool.
Try it with your own numbers
The price that leaves the profit per unit you want.
Open Target profit price calculatorThis guide is general information for decision support, not tax, legal or accounting advice. Fee figures were checked on the date shown against third-party summaries of each platform's fee page; platforms change their fees, so confirm current rates on the official page.