This is how you price your products. You receive the item at a wholesale cost, and then you add a “markup” to the item for resale on your store. That markup is your profit.
Some new business owners will choose the same markup strategy for every product. But this is not a great strategy. You should price your products strategically.
First, consider the product you are selling. If you only have one product, then that one. If you have multiple products on your store, the one you are advertising. You want your markup on your primary product to follow this formula:
Product Price = Cost of Goods Sold + Target Cost Per Action + Profit Margin
The two variables you know are Cost of Goods Sold (COGS) and your Target Cost Per Action (CPA). Your Target CPS is how much you can spend to acquire a customer with marketing.
Your COGS is the price your supplier gives you. And by looking at similar prices products online, you can determine a reasonable amount you can charge for your product. Just go to Google Shopping.
So if you have COGS of $15 and your product price point is market value at $30, then you have a margin of only $15 for your CPA and profit. To make $5 profit per sale, your target CPA needs to be $10.
You can adjust these numbers however you want. But ultimately you want to find a product with enough margin that will allow you to scale a business, because you will incur other costs as you grow. Like hiring a team.
You also need to consider shipping costs. Will you charge for shipping or give free shipping?
Free shipping on stores just means you have to mark your product up to absorb the cost of shipping on your item. This can be done on small, light items because they are cheap to ship. And can help you sell more because of free shipping.
If your product requires more expensive shipping, but your cost is set by market, then you may have to charge for shipping. For example, a basic t-shirt costs $7 to print and $4 to ship. A reasonable price is $20 to sell. Therefore you have a $9 only, and that doesn’t include marketing costs. So you likely need to charge your customers $4 for shipping to keep your margin, because most probably won’t buy a $24 t-shirt.