A seller works out a price the obvious way: the product costs this much, so sell it for that much plus a bit. The maths looks clean. Then the first month's statement arrives, and the profit is smaller than expected, or missing entirely. Nothing was miscalculated in the narrow sense — the cost-plus sum was correct. The problem is that cost-plus answers a different question from the one a seller actually needs answered: not "what covers the product cost," but "what survives everything the sale touches?"

The Pricing and Break-Even Simulator answers the second question. It takes a selling price and works through payment fees, platform fees, shipping, advertising costs, and discounts, showing profit per unit, margin, break-even units, and break-even ROAS — with every formula on display. This post follows one fictional product through both calculations: the price that looked profitable, and the price that actually survives.

The cost-plus price, and what it leaves out

Imagine a fictional seller, Lena Hart, who makes handmade candles under the made-up brand Example Glow. Each candle costs £6 to make: wax, wick, fragrance, and jar. Lena adds what feels like a healthy markup and sets the price at £14. On paper, that is £8 of profit per candle — a margin most sellers would be pleased with.

But a sale is not just a product changing hands. Selling through an online marketplace adds a platform fee; taking a card payment adds a payment fee; posting the candle adds shipping and packaging; promoting the listing adds advertising cost; and the occasional discount code shaves the price further. None of these is a surprise individually, but together they take a large share of that £8. A seller who prices on product cost alone discovers this only after the sales have happened, when the money is already spent.

The simulator's value is that it forces every cost onto the table before the price is set. Payment and platform fees are usually percentages, so they grow with the price; shipping is usually fixed, so it hurts most on cheaper products; advertising cost per sale depends on how much is spent to get each order; and a discount applies to the price the customer pays, which shrinks the base every percentage fee is calculated from. Seeing all of them together, with formulas shown, turns pricing from a guess into a checkable calculation.

Re-running the candle with every cost included

Lena re-runs the £14 price in the simulator with realistic fictional figures: a platform fee of 10%, a payment fee of 3%, shipping and packaging of £3.50 per order, advertising cost of £2 per sale, and a 10% discount code used on roughly the orders she promotes. The simulator works through the chain: the discount brings the effective price down first, then the percentage fees take their share of that reduced price, then the fixed shipping and advertising costs come off, and finally the £6 product cost.

The result surprises her. The profit per unit is not £8; it is a little over £1. The margin — profit as a share of the price the customer actually pays — is in single figures, not the comfortable percentage the cost-plus maths suggested. At that profit, the break-even volume — how many candles must sell to cover her fixed monthly costs, such as her market-stall fee and her tools — is far higher than she planned for. The £14 price is not "wrong" in any moral sense; it is simply a price that leaves almost no room for the realities of selling.

Raising the price to £18 changes the picture substantially, because the fixed costs (shipping, advertising, product) do not grow with the price, while the percentage fees grow only slowly. Profit per unit rises to a level that covers her fixed costs at a realistic sales volume, and the break-even ROAS — the advertising return needed for ads to pay for themselves — falls to a level her past campaigns have actually achieved. The lesson is not "charge more" in general; it is that a price must be tested against the full cost chain, and a few pounds at the low end of a price can be worth far more in profit than the same few pounds at the high end, because fixed costs do not scale.

Worked example: the numbers, step by step

Here is the fictional candle at the £18 price, with the same cost assumptions, worked as the simulator would show them:

  • Selling price: £18.00; discount 10% on promoted orders gives an effective price of £16.20.
  • Platform fee 10% of £16.20: £1.62. Payment fee 3% of £16.20: £0.49.
  • Fixed costs per order: shipping and packaging £3.50, advertising £2.00, product cost £6.00.
  • Profit per unit: £16.20 − £1.62 − £0.49 − £3.50 − £2.00 − £6.00 = £2.59.
  • Margin: £2.59 ÷ £16.20 ≈ 16%.

At £14 with the same discount, the effective price is £12.60, the fees total £1.64, and profit per unit falls to £12.60 − £1.64 − £3.50 − £2.00 − £6.00 = −£0.54 — a small loss on every discounted sale, hidden inside an average that looked profitable only because undiscounted sales carried it. That is the trap in its purest form: a price that profits on some orders and loses on others, with the average concealing which is which. The simulator separates those cases, because it lets the seller test the discounted price on its own rather than trusting an average.

Honest limitations

These outputs are estimates from the seller's own inputs, not financial advice and not a profit promise. If the fee percentages, shipping costs, or advertising costs entered are wrong, the outputs will be wrong too — the simulator calculates faithfully from what it is given, and garbage in still produces garbage out, just more neatly formatted. Real costs also vary: fees change, shipping rates rise, advertising performance fluctuates week to week, and a discount's take-up rate is a guess until the campaign runs. Treat the simulator as a way to test a price before committing to it, and re-run the numbers when any input changes materially, rather than as a one-time verdict.

For promoting the repriced product, UTM Campaign Builder builds consistently tagged campaign links, and CSV Cleaning Studio can tidy a sales export before analysis. The background guide is profit, margin, and break-even explained.

FAQs

How do I calculate a selling price that covers all my fees?

List every cost a sale touches — product cost, platform and payment fees, shipping and packaging, advertising per sale, and any discount — then test the price against the full chain, not just the product cost. A simulator that shows every formula lets you check each step.

Why did my profitable-looking price lose money?

Usually because percentage fees, fixed shipping and advertising costs, and discounts were left out of the original calculation. A discount is especially easy to miss: it shrinks the price that fees are calculated from, so it costs more than its face value suggests.

What is break-even ROAS?

It is the advertising return at which ad spending exactly pays for itself on a product, given its price and costs. If past campaigns beat that return, advertising at that price can pay; if they fall short, the price or the ad costs need to change.

Are simulator results a promise of profit?

No. They are estimates from the inputs you enter. If your real fees, shipping, or ad costs differ, the real profit will differ too. Re-run the numbers when inputs change, and treat the output as a test, not a guarantee.

human review pending client designation