By the iCalculateFast Editorial Team · Finance · Published June 22, 2026 · 8 min read
A handmade candle that sells for $28 on Etsy can net its maker less than $4 after platform fees, payment processing, shipping materials, and the cost of wax, wick, and fragrance. A $30 supplement on Amazon FBA can yield less than $6 after referral fees, fulfillment, and storage. E-commerce platforms make selling easy — but they also take a significant share of every transaction, and sellers who build prices without accounting for every layer of cost routinely discover they are working for far below minimum wage.
The True Cost Stack
Before setting any price, you need to calculate your total cost per unit sold. The cost stack has four layers:
- Cost of goods sold (COGS): the direct cost to produce or source one unit — materials, manufacturing, packaging, inbound shipping to your warehouse or Amazon's fulfillment center.
- Platform fees: every marketplace takes a percentage of the sale price. These are non-negotiable and must be built into your price.
- Fulfillment and shipping costs: picking, packing, and shipping to the customer — whether you do it yourself or pay Amazon/a 3PL to do it.
- Overhead allocation: a proportional share of fixed costs — software subscriptions, photography, advertising, returns processing.
Amazon FBA Fee Structure
Amazon charges sellers two primary categories of fees, as detailed in their seller fee schedule. The referral fee is a percentage of the item sale price (excluding taxes), typically 8–15% depending on the product category. Electronics, books, and industrial products are on the lower end; clothing, shoes, and most consumer goods are at 15%. The FBA fulfillment fee covers picking, packing, and shipping and is charged per unit based on size and weight — a standard-size item under 1 lb costs approximately $3.22 in fulfillment fees as of 2024. Storage fees are charged monthly per cubic foot.
Example: A $30 supplement in a standard-size container. Referral fee (15%): $4.50. FBA fulfillment fee: $3.22. Storage (estimated monthly allocation): $0.30. COGS: $6.00. Total cost: $14.02. Gross profit: $15.98. Net margin: 53%. At first glance this looks good — but before adding any advertising spend (Amazon PPC average ACoS for competitive supplements often runs 30–40% of revenue), that margin shrinks significantly. Many sellers in competitive categories run negative after ad spend without realizing it.
Etsy Fee Structure
Etsy's fee schedule includes a $0.20 listing fee per item (renewed every 4 months or on each sale), a 6.5% transaction fee on the total sale price including shipping, and a payment processing fee of 3% + $0.25. If a buyer is referred from an Etsy ad (Offsite Ads), Etsy charges an additional 12–15% of the order value — and enrollment in Offsite Ads is mandatory for sellers above a revenue threshold.
Example: A $28 candle sold with $5 shipping. Transaction fee (6.5% on $33): $2.15. Payment processing (3% + $0.25 on $33): $1.24. Listing fee: $0.20. COGS (wax, wick, fragrance, container, labels): $6.50. Shipping cost: $5.00. Packaging: $0.75. Total cost: $15.84. Gross profit: $12.16. Net margin: 43%. This is before any Etsy advertising or Offsite Ads. If the sale came through Offsite Ads (15% of $33): add $4.95, bringing net profit to $7.21 and net margin to 26%.
TikTok Shop Fee Structure
TikTok Shop is the newest major e-commerce platform and has used aggressively low fees to attract sellers. Commission rates currently range from 2–8% depending on the category and any active promotional periods. Sellers who work with creators on TikTok Shop pay an additional affiliate commission — typically 10–20% of the sale price — negotiated with each creator. Fulfillment is handled by the seller or a third-party logistics provider unless the seller opts into TikTok's fulfillment service.
Platform Fee Comparison
| Platform | Platform Fee | Payment Processing | Fulfillment |
|---|---|---|---|
| Amazon FBA | 8–15% referral | Included | $3–$7+ per unit (FBA) |
| Etsy | 6.5% transaction | 3% + $0.25 | Seller-arranged |
| TikTok Shop | 2–8% commission | Included | Seller-arranged |
| eBay | 13.25% final value | Included | Seller-arranged |
| Shopify (own store) | 0–2% platform | 2.9% + $0.30 | Seller-arranged |
How to Build a Price That Works
Start from your target net margin — the percentage of the sale price you want to keep after all costs. A 30% net margin is a reasonable target for most physical product categories, as outlined in SBA e-commerce business guidance. If your total cost per unit (COGS + fees + fulfillment) is $14, you need a selling price of at least $14 / (1 − 0.30) = $20 to achieve that margin. Run this calculation before listing the product, not after.
Do not set prices based on competitor prices without first running your own cost stack. Your competitor may have lower COGS, higher volume discounts, or be running at a loss to gain market share. Matching their price without knowing your own costs is how sellers go out of business while appearing to have strong sales.
Calculate Your E-Commerce Profit
Our E-Commerce Profit Calculator breaks down every cost layer by platform — Amazon, Etsy, TikTok Shop, or custom — and shows you your net profit and margin at any price point. Enter your COGS, the platform, your sale price, and shipping costs to see exactly what you keep.
Pricing FAQs
Should I match a competitor who undercuts my price?
Only if your unit economics survive it. Run the lower price through your full cost stack first — product cost, fees, shipping, returns allowance. If matching turns a $6 profit into a $0.40 one, you'd need 15 times the volume to earn the same money, and you probably won't get it. Competing on service, bundling, or speed usually beats racing to the bottom on price.
How often should I re-check my margins?
Quarterly at minimum, and immediately whenever a platform changes its fee schedule or a supplier reprices. Margin erosion is quiet: a 2% marketplace fee increase plus a $0.60 shipping bump can drop a product's true margin from 22% to 15% without a single decision on your part. Sellers who audit per-SKU profitability each quarter catch these leaks; sellers who watch only top-line revenue don't.
Sources & References
- FTC — Selling Online: Complying with Advertising Rules
- Amazon Seller Central — Selling on Amazon Fee Schedule
- Etsy — Understanding Fees
- U.S. Small Business Administration — E-Commerce and Online Sales
Try the free E-Commerce Profit Calculator to run these numbers for your own situation. You can also browse all of our finance calculators — every tool works instantly in your browser with no sign-up — explore more research-backed guides on our blog index, or start from the full calculator directory.
Financial disclaimer: This article is for informational and educational purposes only and is not financial advice. Loan terms, interest rates, tax rules, and market returns vary by lender, jurisdiction, and market conditions. Consult a licensed financial advisor or CPA before making borrowing, investment, or tax decisions. See our full Disclaimer.