Many small sellers start selling online with their shop prices. A few weeks later, orders are coming in, the phone is busy, and yet somehow there is less money at the end of the month. The reason is almost always the same: online selling has costs that do not exist at the counter, and the price was never set to cover them.
This guide gives you a simple method to price your products for WhatsApp, Instagram, your own website or a marketplace, so that every order actually makes you money.
Why your shop price is not your online price
When a customer buys at your counter, they carry the product home. Online, you are paying for things that the customer used to handle:
- Packaging: boxes, bubble wrap, tape, labels
- Delivery: courier charges or your own delivery person’s time and fuel
- Payment fees: payment gateways on websites usually take a small percentage of each order
- Platform fees: marketplaces charge commissions and other fees, which vary by category
- Returns and damage: some orders come back, and some products break in transit
- Your time: answering messages, packing and following up
None of these is large on its own. Together, they can wipe out your whole margin.
Step 1: Know your true product cost
Start with what one unit actually costs you to buy or make. Include:
- Purchase price or raw material cost
- Transport to bring stock to your shop
- Any making or labour cost, if you produce it yourself
Write this down for your top 10 products. Many owners discover they have been guessing for years.
Step 2: Add up the cost of one online order
Now list everything it costs to get one order to a customer. Here is an example for a ₹600 handmade cushion cover sold through a small website and delivered by courier. These numbers are only for illustration; use your own.
- Product cost: ₹250
- Packaging: ₹20
- Courier: ₹60
- Payment gateway fee (about 2%): ₹12
- Average returns and damage (set aside 5%): ₹30
- Total cost of one order: ₹372
At ₹600, this order leaves ₹228 before your time, rent and other running costs. That might be fine. But the same product sold on a marketplace with a commission and closing fee, or with free delivery to a far-away city, could leave far less. Do this calculation for each way you sell.
Step 3: Decide your margin
Your margin is what you keep after all costs, and it has to pay for your time, your shop’s rent and electricity, and leave you a profit. A simple way to set a price:
Price = Total cost of one order ÷ (1 − the margin you want)
For example, if the total cost is ₹372 and you want to keep 35% of the price as margin:
₹372 ÷ 0.65 = ₹572. Round it to a clean price like ₹579 or ₹599.
Notice this is different from just adding 35% to cost. Adding 35% to ₹372 gives ₹502, which actually leaves you only about 26% of the price as margin. Small difference on paper, big difference over hundreds of orders.
Step 4: Handle delivery charges smartly
Customers love free delivery, but someone always pays for it. Common approaches:
- Include delivery in the price: simple for customers, works when delivery cost is similar for everyone.
- Free delivery above a minimum order: for example, free above ₹799. This encourages bigger orders, which is often the best option for small shops.
- Charge delivery separately: honest and clear, but some customers drop off when they see it at the end.
- Local free delivery, courier charges outside: works well for shops that mainly serve their own city.
Step 5: Don’t forget GST
If you are registered under GST, remember that the price shown to customers should normally include GST, and the GST part is not your money. Work out your margin on the price after taking out GST. If you are not sure how GST applies to your products, ask a chartered accountant once. It is worth the small fee.
Step 6: Check against the market, but don’t just copy
Look at what similar sellers charge. If your price is much higher, ask why a customer should choose you: better quality, faster delivery, local trust, personal service? If you cannot answer, you may need to rethink either the price or the product.
Avoid the trap of simply being the cheapest. A small seller rarely wins a price war against big brands and marketplaces. You win on trust, speed and service.
Step 7: Review every three months
Courier rates change, raw material prices rise, and platform fees get revised. Every three months, redo the calculation for your best-selling products. Five minutes with a calculator can save you from months of selling at a loss.
Quick checklist
- I know the true cost of each of my top products.
- I have added packaging, delivery, payment and platform fees.
- I have set aside something for returns and damage.
- My price leaves a margin after GST.
- I have a clear delivery charge policy.
- I will review my prices every three months.
Selling through your own website
One of the biggest advantages of your own website over a marketplace is that there is no commission on every sale, so you keep more of each order and set your own rules. If you are considering it, NearBuyStore builds simple online stores for small businesses, with payments and WhatsApp ordering included.
Also read: WhatsApp Business for Small Shops and what the new UPI charges mean for your shop.