Pricing is a margin problem (not a vibes problem)
Pricing feels emotional, but profitability is math. To protect margins across channels, you need to include fees, refunds and variable costs — not just “COGS”.
The founder-friendly floor price
A simple target is contribution margin after variable costs. The floor price is the minimum price where:
- Net revenue (after refunds) × (1 − fee%) − fixed variable costs ≥ target margin × net revenue
That’s exactly what the Pricing quick check computes.
Discount safety
Discounts are often used to buy volume, but they can silently destroy profitability if your margin is thin. A good rule is to compute:
- Discount room = 1 − (floor price / current price)
If discount room is 10%, a 20% discount is unsafe unless something else improves (AOV, shipping cost, refunds).
Practical checklist
- Separate COGS vs fulfillment. Treat shipping/pick-pack as variable costs.
- Use channel-specific fees. Marketplace fees differ from Shopify.
- Use channel-specific refunds. Broad prospecting often increases returns.
- Recompute quarterly. Costs and refund behavior change with creative and seasonality.
What to do if your price is below the floor
- Raise price (often easiest if you improve perceived value).
- Increase AOV (bundles, add-ons).
- Reduce variable costs (supplier, shipping optimization).
- Improve refund rate (better product pages, sizing info, post-purchase support).
Pair this with the ROAS + profit estimator for a full view of paid acquisition profitability.