Best way to capture necessary data?
How to price product?
Topic summary
The discussion centers on two key questions: how to capture essential business data and how to price products effectively.
Data Capture Approaches:
- Start by identifying critical metrics: revenue, profit, profit margin, conversion rate, AOV, and CAC
- Early stage: Manual tracking is acceptable, but must be updated regularly
- At scale: Real-time profit tracking becomes essential
- Basic revenue/order data available through Shopify Reports
- Third-party analytics apps (like TrueProfit) recommended for automated syncing of profit, costs, and ad spend
Pricing Strategy:
- Basic formula: Product Cost + Fees (shipping, transaction, platform) + Expected Profit
- More sophisticated approach: Work backward from target profit margin
Example calculation:
- COGS: $10
- CAC: $15
- Other costs: $5
- Target profit: $10
- Minimum price: $40
Key considerations:
- Monitor customer demand and competitor pricing
- Account for all operating costs and CAC, not just COGS
- Set target net profit margin (e.g., 30%) before pricing
- Validate pricing with profit margin calculators
Hey @MasalaBliss , thanks for raising your question in our AMA event! Here’s my take:
1. Capturing the right data
Before figuring out how to capture the right data, it’s important to first identify what matters most for your store. Key metrics usually include revenue, profit, and profit margin, as well as marketing effectiveness metrics like Conversion Rate, Average Order Value (AOV), and Customer Acquisition Cost (CAC).
Basic data like revenue and orders can be easily checked using Shopify Reports. For profit, costs, and ad spend, I’d recommend using a third-party analytics app to automatically sync everything and give you accurate numbers (TrueProfit is one option among many).
2. How to price product
There are many ways to set prices, but a simple formula that works for a lot of merchants is:
Your product price = Your product Cost + Fees (Shipping, Transaction Fee, platform fee…) + Your expected profit
Beyond just using this formula, it’s also important to watch customer demand and competitor pricing. Pricing can be tricky, but finding the right balance is key.
Hope this helps!
Hi @MasalaBliss
Happy to clear this up.
1. Best way to capture necessary data.
Not sure where you’re at, if you’re still in the early stage, go for manual tracking, but make sure you’re tracking what actually affects your bottom line—like COGS, ad spend, and net profit. And don’t forget to update it regularly, or your numbers will be useless.
Once you’re getting steady orders, real-time profit tracking becomes a non-negotiable. At scale, the numbers pile up. Without good profit tracking, you’re just running a bigger and riskier business.
Tracking tools like TrueProfit helps by tracking what actually matters to your bottom line, so you’re not buried in numbers that don’t move the needle. The best part is it can handle COGS, CAC, and net profit in real time so you can make decisions with actual data, not outdated spreadsheets.
2. How to price product?
A lot of beginners just do COGS + markup = selling price.
For example, if a product costs $10 to produce, they apply a 2x or 3x markup and sell it for $20 or $30.
But if you’re not considering operating costs and CAC, you could be losing money.
A better approach: Work backward from profit.
Step 1: Set your target net profit margin (ex: 30%).
Step 2: Calculate all costs—COGS, CAC, and operating expenses.
Step 3: Set a price that actually covers everything and leaves a profit.
Example:
COGS: $10
CAC: $15
Other costs (fees, shipping, etc.): $5
Target Net Profit: $10 per unit
→ Minimum Price to Stay Profitable: $40
Remember check your numbers with a Net Profit Margin Calculator before setting prices.