How to calculate the true cost of a product (before you price it)
The sticker price is not the true cost. Shipping, duty, VAT, payment fees, and returns all add up. If you are not calculating the landed cost of every product, you are guessing at your margins.
The landed cost formula
Landed cost = product price + shipping + duty + VAT + payment fees + returns allowance. This is the number to use when pricing. Any other number is an illusion.
Why most sellers get it wrong
Most sellers only look at the product price and shipping. They forget duty and VAT. They forget payment fees. They forget that a percentage of orders will be returned. The result is that a product that looks profitable on paper loses money on every sale.
Building a simple cost spreadsheet
Before you commit to a product, build a spreadsheet with every cost line, and calculate your break-even price. If the market price is below your break-even, walk away — no matter how good the product looks.
The return rate assumption
Assume 5-10% of orders will come back, either because they are damaged, late, or misrepresented. If you do not budget for this, your margins will be eaten alive in your first few months.
Pricing for profit, not for volume
If you price at break-even to compete on volume, you have to sell more than you can realistically handle. Price at a healthy margin instead, and focus on product quality, customer service, and repeat purchases to build a sustainable business.
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