E-commerce Pricing Guide
This guide explains how e-commerce sellers should think about pricing, costs, break-even points, and advertising spend before launching products or running paid ads.
Why this guide exists
Many e-commerce sellers fail not because their products are bad, but because they misunderstand pricing, fees, and advertising costs. Selling products without knowing your real break-even price or profit margin often leads to hidden losses.
This guide was created to help sellers understand the fundamentals of pricing decisions and to show how each calculator on SimpleTools fits into a clear decision-making process.
How to use SimpleTools calculators
The calculators on SimpleTools are designed to be used together. Each tool answers a specific pricing question, but none should be used in isolation.
- Profit Margin Calculator — Understand how much profit you keep after all costs, fees, shipping, and advertising.
- Break-even Price Calculator — Find the minimum price required to avoid losing money on each order.
- Product Pricing Calculator — Reverse-calculate a recommended selling price based on your target margin.
- Ad Cost per Order (CPO) — Estimate how much you can spend on ads while remaining profitable.
- Amazon FBA Fee Calculator — Understand how Amazon fees affect your pricing and margins.
Common pricing mistakes
New and experienced sellers alike often repeat the same pricing mistakes. Avoiding these errors can significantly improve long-term profitability.
- Ignoring platform and payment fees when setting prices
- Running ads without knowing the maximum affordable cost per order
- Assuming revenue equals profit
- Copying competitors’ prices without understanding cost structures
A practical pricing workflow
A simple pricing workflow for e-commerce sellers looks like this:
- Calculate your total product cost (COGS, shipping, packaging)
- Estimate all platform and payment fees
- Find your break-even price
- Set a target profit margin
- Determine the maximum ad cost per order you can afford
Recommended calculators
Use the calculators below to apply the concepts explained in this guide.
Final thoughts
Pricing decisions directly affect profitability, scalability, and advertising success. Understanding your numbers before launching products or campaigns reduces risk and improves long-term outcomes.
SimpleTools was built to provide transparent formulas, clear explanations, and practical calculators for everyday e-commerce decisions.