How much to charge for your e-commerce products

How to Price Your Product the Right Way When Launching an E-commerce Brand

Let’s be real: pricing your product isn’t as simple as saying, “I’ll 2x my cost and call it a day.” That might work if you’re selling lemonade at a school fair, but if you’re building a real Direct-To-Consumer (DTC) brand, especially one where margins matter and paid ads are involved, you’ve got to dig deeper.

So if you’re launching your own brand, whether it’s fashion, skincare, wellness, or even fancy notebooks, this post is your guide to pricing like a pro. Let’s break it down.

1. Calculate Your True Product Cost (Materials + Manufacturing + Packaging)

This is the base layer of your pricing cake. If you produce your own product (for example you make home-made candles let’s say), and you don’t actually pay anything for it, think about the cost of the materials you have to buy to produce it. For most people, you will most likely buy from a manufacturing facility who will give you a Product cost based on a minimum order quantity (i.e. if yoiu buy 100 units, your price will be $10 per unit). In this case, mark down your Product Cost as $10.

For a more comprehensive view of Products Cost, as this very much depends on your product and where you source it from, here are the main components of it:

• Raw materials
• Manufacturing
• Labeling
• Packaging
• Any product testing or certifications (especially in skincare/health)

💡 Pro Tip: Negotiate with the factory a Product Cost that includes all of the above, so you have an upfront view before choosing how to price yoiur product.

2. Factor In Shipping Costs from Manufacturer (Air vs Sea Freight)

This often gets forgotten. Whether you’re ordering from China, Turkey, or Italy, there are shipping/freight charges. A lot of people initially order them via plane, which is a much pricier option. However, if you want to keep yoiur margins lean, explore shipping via cargo-boat, as the price is typically less than 10% of shipping via plane.

To give you a quick comparison, shipping 1000 t-shirts from China to Europe via plane will take yoiu up to 3 days, but you’re charged around $5 per kg, and based on my best friend ChatGPT, 1000 t-shirts weight about 200kg. This means the cost of shipping would be $1000, or $1 per unit. On contrast, if you ship it by Sea Freight (Boat), the same 1000 t-shirts would cost about $120 as you would be charged by Cubic Meter (CBM), aka the amount of space the products take. This would result in a shipping cost of $0.12 per unit, which adds up substantially, but of course, you would have to wait about 2 months to receive your products (depending on where you order it to).

Other costs you should consider as part of shipping the products to you are:

• Sea or air shipping
• Port handling fees
• Inland transport to your warehouse/home
• Insurance on the goods while in transit

3. Include Import Duties, VAT & Customs Fees

Depending on where you’re importing from and to, you might get hit with:

• Customs duties
• Import taxes
• Broker fees
• VAT (Value Added Tax) if you’re in the EU, UK, UAE, etc.

It’s always important to ensure you take into account any of the $$$ you will have to pay to receive your products,a dn to legally sell them in your (and other) countries. Note that VAT and customs vary depending on the country/region you sell in, so always do your research ahead of time.

💡 If you’re in Europe or the UAE, VAT is also something you’ll need to charge on sales, and pay on imports. Make sure you know your thresholds.

4. Account for Warehousing & Fulfillment Costs

When you receive the products you purchased and pay all the import duties, it’s time for you to store them somewhere, until you can sell them. And then of course, you gotta deliver them to the customers who purchase. And all of this incurs a cost, even if you’re fulfilling orders from your living room (because technically, you probably still pay for rent right?).

Here are the costs you should include when making this calculation:

• Storage fees (3PL or your own rented space)
• Fulfillment costs (picking, packing, shipping)
• Packaging material (boxes, tissue, tape)
• Return processing (in the case you offer free returns, which a lot of brands these days do)

💡 Pro Tip: 3PLs usually charge per order, per unit, and per month for storage - don’t be surprised by small fees that quickly add up. The costs will depend on the type of product you sell (how much it weights and how much space it takes), as well as how much volume you sell.

5. Calculate Customer Acquisition Cost (CAC) - The Make-or-Break Factor

This is the big one. It’s one thing to create a beautiful product, but a completely different thing to get someone to buy it. But don’t worry, you’re in the right place. I mean isn’t this place called “Selling with Nas”? 😅

Each product has a different value proposition, target audience and channels of distribution, so perhaps the best way to acquire customers will be with paid ads, with organic content, or by creating lead magnets to ramp up inbound queries. If you want support with scaling you brand, drop me a message and I’ll do my best to help you.

These are some of the things that take into account when calculating CAC:

• Paid social ads (Meta, TikTok, Google, etc.)
• Influencer fees
• Content production
• Email and SMS tools
• Time (yes, your time counts too)

A lot of early-stage brands spend 30–50% of their revenue exclusively on acquiring customers. So if your CAC is $25 and you’re selling a $40 product… you’re in big trouble, because chances are, you product will not be net profitable.

6. Budget for Return & Exchange Costs

People will often buy a product they’re not too sure about, and return it later. This doesn’t mean your product is bad, it’s just a normal part of today’s shopping habits. But what you need to know is that returns aren’t just a refund. There are other costs you’ll likely eat, and those include:

• The return shipping fee
• The lost fulfillment cost
• The chance that the product is unsellable again

Build in a margin buffer for these, especially if you’re in fashion or shoes where returns are common. And if at some point you see your % of returns are higher than 5%, then you might have a misalignment between customer expectations what is advertised on your website. This is a whole new problem to have, but hopefully you will never experience it.

7. Handle Sales Tax & VAT Collection

If you’re selling in countries that charge VAT or sales tax, you will most likely have to:

• Collect that tax on the time of checkout
• Remit it to the local government

In most DTC setups, you don’t keep this money - so don’t treat it like revenue and definitely don’t spend it, because you’ll have to give it to the government.

8. Determine Your Profit Margin & Pricing Strategy

Now that we’ve covered costs… what’s left?

Here’s a simple way to approach it:

Let’s say your dress costs $25 to make and ship to your warehouse.
If you price it at $100:

• $25 Product Cost
• $15 Fulfillment
• $20 CAC
• $5 Returns buffer
• $5 Tax/VAT

That leaves $30 profit (maybe). But as I mentioned above in this post, the best place to start is the E-commerce Calculator.

And always remember, marking your product up in terms of price is not about being greedy. It’s about understanding the costs you will have and set yourself up to success so you can make a prodit and continue operating (and hopefully growing).

Nas’ Note: Don’t Be Afraid to Charge More

A lot of founders underprice because they think low price = more attractive. But the truth? If you’re solving a real problem and offering value, customers will pay. You just need to clearly communicate why your product is worth it.

So take a step back, build your pricing model in a simple spreadsheet, and make sure you’re actually building something that can scale and pay your rent (at the very least). Oh and of course, if you need help, just reach out!