Adding a percentage markup does not necessarily create the same percentage profit margin. Payment fees can depend on final selling price, so a target-price calculation solves the relationships together.
Collect costs without double counting
Enter non-fee cost, fixed payment fee and percentage fee separately. Include goods and fulfillment if those are costs the price must cover. Do not put the same processor fee inside product cost and again in the fee fields. Confirm which amount the provider actually charges fees on.
Solve with revenue as the denominator
Price equals (cost + fixed fee) divided by (1 − fee fraction − target margin). The denominator must be positive. The tool rounds the minimum price upward to a cent rather than rounding below the target. It remains a contribution model unless all relevant overhead is included.
Test refunds and acquisition cost
A price can meet a per-sale margin before returns and advertising but fail after them. Use the ecommerce contribution worksheet for those assumptions. Pass-through taxes and whether fees apply to them are not automatically inferred; compare the model with actual payment-provider terms.
Worked example
Scroll the table horizontally on small screens to see every column.
| Cost | Fixed fee | Fee rate | Target margin | Minimum price |
|---|---|---|---|---|
| 60 | 2 | 3% | 20% | 80.52 |
The unrounded price is 62 / 0.77. Rounding upward preserves the target in this cost model.
Sources and checks
Examples are illustrative and can be checked with the linked tools. Read each tool’s assumptions before applying its result. How we verify methods.