Profit Margin

Ask Me Anything Q&A Trueprofitaprilama

Topic summary

A user asks about appropriate profit margin targets for product pricing.

Pricing Formula Provided:
Product Price = Product Cost ÷ (1 - Desired Profit Margin)

Recommended Margins by Product Type:

  • Low-ticket items (accessories): 20–30%
  • Mid-ticket items (apparel, home goods): 30–50%
  • High-ticket/branded items: 50–70%+
  • Digital products: 70–90%+

Important Considerations:

  • Common target range is 40–60%, but varies by niche and perceived value
  • Product-level margins don’t account for platform fees, shipping, transaction costs, and advertising spend
  • Actual net profit requires tracking all operational expenses
  • Profit tracking tools can automate real-time cost monitoring

The discussion remains open for follow-up questions or specific examples.

Summarized with AI on October 29. AI used: claude-sonnet-4-5-20250929.
1

What profit Margin should I be targeting to price my products correctly?

2

Hi @Lsestelle1 , great question! Here’s a simple formula you can use as a starting point:

Product Price = Product Cost ÷ (1 - Desired Profit Margin)

Your desired profit margin can vary depending on your niche, competitor pricing, and how your customers perceive the value of your product. That said, a common target range is 40–60%, but here’s a more detailed breakdown by product type:

  • Low-ticket products (e.g. accessories): aim for 20–30% margin — lower profit per sale, but higher volume potential.

  • Mid-ticket products (e.g. apparel, home goods): target 30–50% — this is the sweet spot for many Shopify stores.

  • High-ticket or branded items: go for 50–70%+ — customers often expect to pay more for higher perceived value.

  • Digital products: expect 70–90%+ — since costs are minimal, margins are naturally high.

Just a heads-up: the profit margin here is product-level only. In reality, you’ll also want to factor in platform fees, shipping, transaction fees, ad spend, and more. Tools like TrueProfit help automate this by tracking all your real costs and giving you your actual net profit in real time—so you’re never just guessing.

Hope that helps! Happy to run through a real example if it’s helpful.