30% margin pricing formula
Required price = non-percentage order costs ÷ (1 − percentage fees − target margin).
Use percentage fees as decimals. For example, use 0.08 for 8% percentage fees and 0.30 for a 30% target margin.
Worked example
Assume a seller has $24 in non-percentage costs for one order: product, packaging, seller-paid shipping, fixed fee components, and allocated overhead. The seller expects 8% percentage fees and wants a 30% margin.
| Step | Calculation | Result |
|---|---|---|
| Set the denominator | 1 − 0.08 − 0.30 | 0.62 |
| Calculate planning price | $24 ÷ 0.62 | $38.71 |
| Estimated percentage fees | $38.71 × 8% | $3.10 |
| Estimated profit | $38.71 − $24 − $3.10 | $11.61 |
| Estimated margin | $11.61 ÷ $38.71 | 30% |
Costs sellers often miss
- Platform and payment fees, including fixed per-order components
- Packaging, labels, fulfillment labor, and seller-paid shipping
- Returns, replacements, refunds, and customer service time
- Advertising, affiliate commissions, and promotional discounts
- Monthly software, plan, and overhead allocation
Check the price before using it
A formula creates a planning price, not a market-tested price. Compare the output with competitor positioning, expected conversion, inventory turnover, and customer willingness to pay. If the price is not viable, change the cost structure, target margin, bundle size, channel, or offer rather than hiding costs from the calculation.
Frequently asked questions
Is a 30% profit margin good?
It depends on category, lifecycle, return rate, customer-acquisition cost, working-capital needs, and business goals. Use a target that leaves a buffer for uncertainty.
Should advertising be included in a target price?
Include expected acquisition cost when advertising is required to obtain the order. If it changes by campaign or channel, test a range of scenarios.
Is margin the same as markup?
No. Margin divides profit by revenue, while markup divides profit by cost. A 30% margin requires a higher markup than 30%.