Pricing your products without losing money is easier than it seems: you just need to cover all your actual costs and add a margin that allows you to grow. Here we explain step by step how to do this in a clear and profitable way for your online store.
If you have an online store and want to know how to price your products without losing profits, the key is to know exactly how much each sale costs you and then decide on a price that covers that plus a reasonable margin. With a well-thought-out strategy, you avoid selling cheaply by mistake and make your business sustainable from day one.
Why do so many entrepreneurs lose money when pricing?
Most set prices “by eye,” copying the competition or thinking only about the cost of the product, forgetting expenses such as shipping, advertising, returns, taxes, and their own time. The result: they work hard and earn little (or nothing). A good pricing strategy is the foundation of any successful sales strategy.
Practical steps for setting prices without losing money
1. Calculate ALL your actual costs
Before thinking about profits, add up absolutely everything you spend to get a product to the customer:
- Cost of the product or raw materials
- Shipping (to the customer and to you if you buy from the supplier)
- Packaging and labels
- Advertising (Facebook Ads, Google, influencers)
- Platform commissions (Mercado Libre, credit cards, etc.)
- Taxes
- Your time (yes, it’s worth money too!)
Little-known tip: divide your desired monthly salary by the number of products you expect to sell. That amount should also be included as a cost.
2. Find your break-even point
This is the magic number where you neither gain nor lose. The formula is simple:
Monthly fixed costs ÷ (Selling price – Variable costs per unit) = units you must sell to cover everything
Example: Fixed costs = $300,000 per month Selling price = $25,000 Variable cost per unit = $12,000 Contribution margin = $13,000 Break-even point = $300,000 ÷ $13,000 = 23 units per month
If you sell more than 23 units, you start to make a real profit.
3. Choose your pricing strategy
a) Cost-based pricing + margin (the safest way to start) Total cost per unit × 2 or × 2.5 = recommended price Example: if it costs you $10,000 to sell a T-shirt, sell it for between $20,000 and $25,000.
b) Price based on perceived value If your product solves an important problem or is unique, you can charge more than the competition. Example: Handcrafted scented candles with premium essences sell for twice as much as industrial ones.
c) Psychological pricing
- $19,900 instead of $20,000 (seems much cheaper)
- $25,000 for premium products (round numbers convey quality)
d) Dynamic or seasonal pricing Raise prices slightly at Christmas, Black Friday, or Mother’s Day, and lower them slightly during slow months to maintain cash flow.
4. Test and adjust constantly
Raise the price of some products by 5-10% and see if sales drop. Often, people are willing to pay more than you think. A/B testing is your best ally.
Little-known tips that make a difference
- Include the cost of returned products (on average 10-15% in fashion).
- If you use dropshipping, add the cost of canceled orders (the supplier will still charge you).
- Offer packs or bundles: the average ticket goes up and the customer feels like they are saving money.
- Use the rule of 9 only on products under $100,000; above that value, round numbers work better.
Where to set up your online store without getting eaten alive by commissions?
Neolo Shop is the ideal option because it never charges commissions on sales (unlike Shopify, which take a percentage of each transaction). Plus, you can try it completely free for 30 days and see real results without risking any money.
Conclusion
Setting the right prices isn’t about guessing or copying your neighbor: it’s a simple but powerful calculation that allows you to cover costs, pay your salary, and continue to grow.
When you know exactly how much each sale costs you and apply one of these strategies, you stop losing money and start building a truly profitable business.
Frequently asked questions about pricing
What is a healthy profit margin?
Between 30% and 60% after all costs, depending on the sector. Less than 20% is very risky in the long term.
Can I raise prices if I already have customers?
Yes, as long as you communicate it transparently (“better materials,” “new design”) or do it gradually. Most people accept it without any problem.
What do I do if the competition sells cheaper?
Differentiate yourself by quality, customer service, fast shipping, or extended warranty. Customers who are only looking for cheap prices are not your ideal customers.
Are massive discounts helpful or harmful?
Used intelligently (Black Friday, stock clearance), yes. Every day, no: you train your customers to never pay full price.
Start calculating your actual costs today and adjust your prices. Your future self (and your bank account) will thank you.