How to Price Products in Your Online Store: The Profit Formula Step by Step
Mohamad AboAzan · · 3 min read
In short
The right selling price = the product's full cost (purchase + packaging + any delivery you cover + advertising share + share of fixed costs) + the margin you want. Calculate full cost first, compare with the market to see where you stand, use coupons instead of permanent discounts, and recalculate whenever costs change.
Create your store on Matjarji →Many sellers price by copying a competitor or adding a random amount to the purchase price, then discover months later they're selling without profit. Here's a structured method.
Step 1: Calculate the full cost
- Purchase price or production cost.
- Packaging: bags, boxes, stickers.
- Delivery, if you cover all or part of it.
- Advertising share: monthly ad budget ÷ expected orders.
- Fixed-cost share: store subscription, internet, phone ÷ expected orders.
- Returns and damage rate, if any.
Step 2: Add your margin
Margin is a percentage of the selling price. An illustrative example with made-up numbers: full cost 70 units and you want a 30% margin. Selling price = 70 ÷ (1 − 0.30) = 100 units. Note that adding 30% to cost (91) gives a margin below 30%.
💡 The right margin depends on the category: fast-selling essentials carry lower margins; distinctive or handmade products carry higher ones.
Step 3: Compare with the market
Look at competitor prices to know where you stand, not to copy them. If you're higher, justify it with clear value: better quality, faster delivery, a guarantee, better service, gift wrapping. If you're much lower, make sure you aren't losing money.
Step 4: Use offers wisely
- Use a discount coupon for a first order or an occasion instead of a permanent price cut.
- Offer bundles: two items for less than separately, raising the average order value.
- Free delivery above a set amount encourages adding items.
Step 5: Review prices regularly
Purchase costs, delivery and exchange rates change. Review prices at least monthly, and immediately when costs change. An online store makes updating prices easy.
Common pricing mistakes
- Forgetting delivery and advertising costs.
- Undercutting competitors without doing the maths.
- Permanent discounts that teach customers never to pay full price.
- Not updating prices as costs rise.
How to create your store on Matjarji
Once your prices are calculated, put them in a store that makes them easy to change and add coupons to. Matjarji is an online store builder made for Arab merchants wherever they are: you create your store in about five minutes, with no technical skills and no commission on your sales.
- Go to the store creation page.
- Choose your business type (clothing, supermarket, perfumes, cars, real estate and more) and a plan.
- Write your store's name and pick its own address, like your-name.matjarji.com.
- Add your WhatsApp number, how customers pay (cash on delivery, Sham Cash) and your delivery fee.
- Press create: your store is online with sample products you edit with your own photos and prices.
What you get:
- Organised orders in a dashboard or sent to your WhatsApp, with guest checkout if you want it.
- Cash on delivery and Sham Cash, with your delivery fee shown before the customer orders.
- Discount coupons, notifications for your customers and statistics on visitors and orders.
- Product and category pages built for search engines, so new customers find you on Google.
- A fixed subscription with no commission on your sales, paid by Sham Cash or Western Union.
Plans: «Intilaqa» is the low-cost plan to begin with; «Tawassu'» and «Riyada» are for more orders and come with a free trial, so you can try your store before paying. Current prices and offers are in the pricing section.