Guide
Pricing and margins for resellers
7 min read · updated
Calculate landed cost as unit price plus shipping, duties, payment fees and packaging per unit. Subtract landed cost and selling fees from your resale price to get contribution margin. If margin does not cover advertising cost per sale plus returns, the category is not viable at that price.
Landed cost, not unit price
The supplier's unit price is only part of the cost. Landed cost includes freight, duties and import charges, payment processing, inbound handling and packaging, divided per unit.
Most first-time reselling losses come from pricing against unit price and discovering the rest afterwards.
Contribution margin
Contribution margin is resale price minus landed cost minus selling fees. It is the money available to cover advertising, returns and overhead before any profit.
- Landed cost = unit price + freight + duties + fees + packaging, per unit
- Contribution margin = resale price - landed cost - platform and payment fees
- Viable if contribution margin > advertising cost per sale + expected returns cost
The break-even check
Before ordering, divide your fixed monthly costs by contribution margin per unit. That is how many units you must sell each month to break even. If the number looks unreachable at your current traffic, change the price, the category or the supplier.