DevanovaMost new sellers price a product as cost plus a guess. The sale looks fine until returns, shipping and fees are counted, and the profit is gone. This guide shows how to find the price that keeps a real profit.
Step 1: List every cost for one order
- Product cost and any packaging you add.
- Marketplace fees. Commission, fixed fees and collection fees differ by marketplace and category and they change. Read them from the fee calculator in your seller dashboard on the day you price.
- Shipping. Usually based on weight and zone. Use the current rate card.
- Advertising per order, if you run ads.
- Tax. How GST affects your profit depends on whether you are registered and what you sell. Ask your chartered accountant before you finalise prices.
Step 2: Count returns as a cost
Returns cost you twice: the shipping and the product that may come back damaged or not at all. Estimate your return rate. Fashion sellers often start by assuming around one in five orders comes back, but that is only a guess until you have your own data and the loss on each returned order.
Step 3: Work out profit per order placed
Profit on a delivered order is the selling price minus all the costs above. Then take away the loss on returned orders. Here is an example with made-up figures. Use your own.
| Item (example) | ₹ per order |
|---|---|
| Selling price | 499 |
| Product cost | 220 |
| Packaging | 12 |
| Marketplace fees (assumed) | 90 |
| Shipping | 60 |
| Advertising | 25 |
| Profit on a delivered order | 92 |
Now take 100 orders with 20 returned, and assume each return costs you ₹110 (shipping both ways and lost stock).
- 80 delivered orders × ₹92 = ₹7,360
- 20 returned orders × −₹110 = −₹2,200
- Net for 100 orders = ₹5,160, or ₹51.60 per order placed
That is about 10 percent of the price, not the 18 percent a quick glance at ₹92 suggests. Returns took a large share of the profit.
Step 4: Set a floor price and test
Decide the lowest profit per order you will accept, and never discount below the price that gives it. Change one thing at a time, such as price or ad spend, and look at the numbers after a few weeks.
Common mistakes
- Leaving returns out of the calculation.
- Using last year's fees or last month's shipping rates.
- Pricing to match the cheapest seller without checking whether you still profit.
- Ignoring packaging and ad costs because they are small per order.
Try it with your own numbers in NetKeep, or track real results product by product in ProfitKhata.
Want help putting this into practice? Tell us the problem and we start with the Diagnose step.
This guide is general information, not tax, legal or financial advice. Fees, rules and rates change, so confirm current details with the official source or a qualified professional.