The short answer
Price = costs ÷ (1 − fees − refunds − the profit you want)
To price a product so it still makes money after fees, shipping and ads, add up every cost of one sale, then divide by what's left of each dollar after percentage costs and the profit you want to keep. With the example numbers, $27.30 of costs ÷ 0.791 = $34.51.
Worked example (the numbers above)
| Costs per sale | $12 product + $6 shipping + $1 packaging + $0.30 fixed fee + $8 ads = $27.30 |
|---|---|
| Left of each $1 | 1 − 3% refunds − 2.9% fee − 15% profit = 0.791 |
| Price | $27.30 ÷ 0.791 = $34.51 |
| Check | $34.51 × (1 − 3%) − $19.00 costs − $1.30 fees − $8.00 ads = $5.18, which is 15% of the price |
| Your current price | At $32.00 you keep $2.81 per sale (8.8%) |
Margin vs. markup
Margin and markup are often mixed up, and the difference is big. Markup is profit as a share of cost; margin is profit as a share of price. Doubling your cost is a 100% markup but only a 50% margin.1 And both usually count only product cost, so a 60% margin can still lose money once shipping, fees and ads are paid.
| Markup | Same as margin | Price = cost × |
|---|---|---|
| 25% | 20.0% | 1.25× |
| 50% | 33.3% | 1.50× |
| 75% | 42.9% | 1.75× |
| 100% | 50.0% | 2.00× |
| 150% | 60.0% | 2.50× |
| 200% | 66.7% | 3.00× |
| 300% | 75.0% | 4.00× |
Margin = markup ÷ (1 + markup). Markup = margin ÷ (1 − margin).
Why fees and refunds go in the divisor
Payment fees and refunds grow with the price: charge more and the 2.9% fee is bigger too. Adding them to costs would underprice the product slightly. Taking them out of each dollar first, like the formula does, gives a price that keeps your target exactly.
Questions
How do I price a product on Shopify?
Add up everything one sale costs you: product, shipping you pay, packaging, the fixed part of the card fee and your ad cost per sale. Divide that by 1 minus your card fee rate, refund rate and the profit you want to keep. The result is the lowest price that keeps that profit.
What profit margin should I aim for?
It depends on your costs and how you sell, so there's no single right number. This calculator lets you set the profit you want to keep after every cost, which is more useful than a product-only margin. Start by finding your current real margin, then decide.
What's the difference between margin and markup?
Markup is profit divided by cost. Margin is profit divided by price. A $10 item sold for $20 has a 100% markup and a 50% margin.
Why is my 50% margin product still losing money?
Because that margin usually only subtracts product cost. Shipping you pay, payment fees, refunds, discounts and ad cost per sale come out of the same price. Enter them here, or see each product's real margin in the report.
Should I include ad cost per sale?
If you advertise, yes. Ads are part of what each sale costs you. If you're not sure of your number, try the break-even ROAS calculator to find the most you can spend per order.
Is this financial advice?
No. It's an estimate from the numbers you enter, to help you think about pricing.
Sources
- Corporate Finance Institute: Markup (definition and margin vs. markup)
- Shopify pricing: Shopify Payments card rates (2.9% + 30¢ default) Checked October 18, 2026.
- Shopify Help Center: Refunds and Shopify Payments payouts
Checked October 18, 2026. If something has changed, email hello@groundworkmetrics.com and I'll fix it.