Pricing for profit on your own store

On a marketplace, pricing is partly decided for you — by comparison shopping, by the platform's own promotions, by what the competing listing next to yours says. On your own store you have genuine latitude, and that latitude is only useful if you know your costs.

Most pricing on Malaysian own-brand stores is set by a markup on supplier cost, adjusted by feel. That method has three specific failure points, and each of them is fixable.

Where markup pricing goes wrong

It marks up the invoice, not the landed cost. Freight and duty are excluded, so the markup is applied to a cost that is lower than the real one, and the resulting margin is thinner than intended by exactly that amount — see cost of goods sold for Shopify stores.

It ignores the costs after the sale. Payment processing, the platform transaction fee and delivery all come out of the margin the markup created. A markup that looks generous can leave very little once they are deducted.

It applies one multiple across the range. Heavy items, light items, fast movers and slow movers all have different post-sale cost profiles, so a single markup produces wildly different actual contributions across a catalogue.

The result is a price list where some products are comfortably profitable, some are marginal and one or two lose money on every sale — and nothing in the pricing method distinguishes them.

Price from contribution, not from cost

The change is to work forwards from what you need to keep rather than upwards from what you paid.

Start with the contribution you want per order. Then add back, in order: expected returns provision, delivery net of what you will charge, packaging, the platform transaction fee, payment processing, discount you expect to give, and landed cost. The sum is your price — see the real margin on a Shopify order.

Done for a few representative products, this establishes something more useful than individual prices: it tells you the minimum viable price by weight band and value band, which is a rule you can apply across a catalogue rather than a calculation you repeat per item.

Two products with identical supplier costs and different weights should not carry the same price. Markup pricing says they should.

The four structural decisions

Pricing an own-brand store is not only about individual prices. Four structural choices do more work than any of them.

Free shipping threshold. The most powerful lever available. It lifts basket size and it costs you delivery on every order that qualifies, so it should be set from your contribution-by-order-value data rather than by matching what a larger competitor does — see shipping revenue versus shipping cost.

Minimum order value. Small orders carry fixed costs — a per-transaction charge, delivery, packaging — that can exceed their entire margin. A minimum is less customer-friendly than absorbing them and considerably cheaper.

Delivery charging. Flat, zone-based, weight-based, or free above a threshold. Simpler converts better and accurate costs less, and the right answer depends on how much your products vary in weight.

Bundle pricing. Sells more units per delivery charge, which is the cheapest kind of revenue growth available to an online store — one parcel, one payment fee, more margin.

Where the online price sits against the shop price

A live question for any retailer running both, and there is no single correct answer — only consequences to be aware of.

Same price in both is simplest to explain and easiest to administer. It also means one channel is subsidising the other, because their cost structures genuinely differ: the shop carries rent and staff, the store carries delivery, acquisition and payment fees.

Different prices reflect the real costs and invite the question from customers, which needs a straightforward answer ready.

Same price with different inclusions — free delivery above a threshold online, immediate collection in store — is usually the most workable position, because it lets each channel offer what it is actually good at without a visible price gap.

What matters is knowing the contribution per order in each channel before deciding, because the intuition about which channel is more profitable is frequently wrong — see which sales channel is most profitable.

Reviewing prices without repricing everything

Continuous repricing is not the goal. Knowing when a price has stopped working is.

Review on cost movement, not on a calendar. A supplier price change or a meaningful exchange rate move is the trigger. For imported goods that is a currency question as much as a supplier one — see importing and foreign currency.

Watch contribution per product monthly, ranked. A product whose contribution is falling without a price change has a rising cost somewhere, and delivery surcharges are the usual culprit.

Check the discounted price, not the list price. If a product is discounted most of the time, the discounted price is the real price and it is the one that needs to be viable — see discounts, vouchers and what they really cost.

Look at the extremes first. Your highest-volume line, because a small margin error is multiplied, and your heaviest low-value line, because that is where delivery is most likely to have quietly overtaken margin.

Four checks, monthly, on data that reconciliation has already produced. It is a short review rather than a project, and it is the difference between prices that were right once and prices that are right now.

Common questions

What is wrong with pricing by markup on supplier cost?

Three things: it marks up the invoice rather than landed cost, so freight and duty are missing from the base; it ignores the costs that come after the sale, including payment processing, the platform transaction fee and delivery; and it applies one multiple across products with completely different post-sale cost profiles, particularly weight.

How should an own-brand store set prices instead?

By working forwards from the contribution you need per order, adding back the returns provision, delivery net of what you charge, packaging, the platform transaction fee, payment processing, expected discount and landed cost. Done for representative products, this yields a minimum viable price by weight and value band that can be applied as a rule across a catalogue.

Should online and in-store prices be the same?

There is no single right answer, only consequences. Identical pricing is simplest and means one channel subsidises the other, since their cost structures genuinely differ. Different pricing reflects real costs and invites customer questions. Same price with different inclusions — free delivery above a threshold online, immediate collection in store — is usually the most workable.

When should prices be reviewed?

On cost movement rather than on a calendar: a supplier price change or a meaningful exchange rate move for imported goods. Alongside that, watch contribution per product monthly, check that the usually-discounted price is itself viable, and look first at your highest-volume line and your heaviest low-value line, where errors are respectively multiplied and hidden.

Related: the real margin on a Shopify order · per-product profitability on your own store · how to price products on Shopee for profit