How to Price Your Ecommerce Products in 2025
Pricing your ecommerce products correctly is one of the most important — and most overlooked — parts of building a successful business. Set your prices too low, and you lose money. Set them too high without justification, and customers will bounce. But get it right, and pricing becomes a lever that boosts conversions, profits, and brand trust all at once.
This guide will walk you through the full process of pricing your products with confidence. No fluff. Just a clear, practical method you can use today.
Step 1: Know Your True Costs
Many beginners set prices based only on what they paid for the product. But that is a shortcut to losing money. To price accurately, you need to calculate your full cost per sale.
Here is what to include:
- Cost of goods
- Shipping to customer
- Transaction fees (such as Shopify and Stripe)
- Advertising cost per acquisition
- Packaging or labelling
- GST or other taxes
- Any fixed overheads
Example:
Let us say you are selling a skincare serum.
- Product cost: $7
- Shipping: $6
- Transaction fees: $1.80
- Advertising per sale: $18
- Packaging: $1.50
- GST: $3 (based on a $33 price)
Your true cost is around $37.30. If you price at $33, you are losing money — even though it might feel like you are covering your expenses.
Many profitable stores aim for margins above 60 percent, especially if they use paid advertising to drive traffic.
Step 2: Study Competitors Without Blindly Copying
Looking at other brands in your category can help you understand the market — but it is not a pricing strategy on its own. You do not know their cost structure or goals.
Here is what to focus on when analysing competitors:
- Who they are targeting. Are they going for budget-conscious shoppers or premium buyers?
- What is included in their pricing? Free shipping, bundles, or free gifts?
- Where they are selling. Prices on a marketplace like Amazon are often lower than on brand-owned websites.
- What customers are saying. Look at reviews to see if price is mentioned as a strength or a problem.
You can also use tools like SimilarWeb or Meta Ad Library to see where they are advertising and how they are positioning their offers.
Step 3: Use Pricing Psychology That Converts
Smart pricing is not just about the number — it is also about how that number feels. Here are several psychological strategies that are proven to increase conversions:
- Use prices just below whole numbers, like $29 instead of $30. Customers mentally round down.
- Bundle multiple products together with discount tiers. For example, one item for $29 or three for $69.
- Use a comparison price to anchor perceived value. This only works if the comparison is genuine. Shoppers can sense false discounts.
- Offer tiered pricing, like Basic, Standard, and Premium. Let buyers choose based on their needs.
- If positioning your brand as high-end or minimalist, use round numbers like $80 or $100. These look cleaner and more premium.
Step 4: Factor in Consumer Expectations and Behaviour
Understanding how your audience thinks about pricing can help you build trust and increase conversions.
Customers expect the price shown to be the full price — including tax.
They also tend to expect free or flat-rate shipping, especially for orders above a certain value. For example, offering free shipping on orders over $75 can drive larger cart sizes.
Many buyers prefer flexible payment options. Offering buy-now-pay-later choices like Afterpay or Klarna can boost your conversion rate, especially for items over $75.
A generous and clearly written return policy can also help customers feel more confident, even at higher price points.
People respond best to prices that reflect real, tangible value. Avoid gimmicks. Focus on usefulness and clarity.
Step 5: Balance Your Pricing With AOV and CAC
Two key numbers matter here: your average order value (AOV) and your customer acquisition cost (CAC).
- AOV is your total revenue divided by the number of orders.
- CAC is how much you spend on ads or marketing to get a new customer.
You want the difference between your AOV and your true cost to be higher than your CAC — with room for profit.
If you are not tracking these numbers, you are making guesses instead of decisions.
To increase AOV:
- Offer product bundles
- Add upsells or cross-sells
- Include free shipping at a minimum spend threshold
Sample Pricing Breakdown by Product Type
Use this as a benchmark, but always build your own model based on your specific costs and audience.
Pricing Mistakes to Watch For
- Setting prices too low to compete
If your brand looks cheap, it will attract discount-focused buyers. Instead, raise perceived value by improving your product pages and bundling smartly. - Copying competitor pricing blindly
You do not know what their margins are or if they are profitable. - Ignoring CAC
Your ad costs might be eating your margin. Check Meta and Google Ads dashboards regularly. - Not testing
Even small price changes can lead to big differences in conversion. Run tests with $29 versus $34 or $39.
Frequently Asked Questions
Do I need to include GST in my prices?
Yes, if your business is registered for GST, prices shown to consumers must include it.
How should I price digital products?
They tend to have higher margins, but perceived value matters. Use tiered offers or bonuses to justify the price.
Should I include shipping in the product price?
If possible, yes. It simplifies the offer. Alternatively, use a flat shipping rate and offer free shipping on larger orders.
Can I charge more than major retailers?
Yes, as long as your customer experience, branding, or speed makes it worth it. Many shoppers choose direct brands over marketplaces for exactly this reason.
How often should I review pricing?
Every month if you are running paid traffic. At a minimum, check every quarter to make sure your margins are holding.
How Ecom Capital Helps You Price Smarter
We help ecommerce founders build pricing strategies that are rooted in real numbers, not guesswork. Our team helps you:
- Align your prices with your CAC and AOV targets
- Use bundles and tiers to maximise average cart value
- Position your offer to match perceived value
- Apply pricing psychology without gimmicks
If you are unsure whether your pricing is helping or hurting your growth, we can help you find clarity.
Book Your Free Pricing Strategy Session
If you need help calculating margins, choosing your pricing structure, or designing profitable offers — book a free strategy session with our team.
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