Price is not revenue: how to find a sustainable pricing floor

Start from the economics the price must support

Your price has to absorb the costs attached to a normal transaction while leaving enough contribution margin for the business to operate and grow.

That means the pricing floor must reflect product cost, fulfillment, percentage fees, fixed transaction fees, returns, discounts and acquisition cost—not just COGS.

Three prices matter

• Break-even price: the estimated price at which contribution profit reaches approximately zero under the current assumptions.
• Minimum profitable price: a buffer above break-even that avoids operating at the edge of loss.
• Commercial price: the actual market-facing price chosen after considering demand, positioning, perceived value and competitive context.

Stress-test before discounting

A product that is profitable at list price may become unprofitable with a 15% discount once percentage fees, ad cost and shipping are included. The correct question is not whether the discount increases conversion; it is whether the resulting order still creates enough profit.

Scenario analysis is especially useful before seasonal promotions, bundles, marketplace campaigns or paid-acquisition scaling.

Pricing decisions should be reversible and evidence-led

• Model the current price and at least two realistic alternatives.
• Separate product revenue from customer-paid shipping.
• Recalculate fees that depend on transaction value.
• Check contribution profit and margin, not only revenue.
• Define the condition that would make you reverse the price change.