To calculate a selling price, start from the real total cost of the unit — product, packaging, shipping, payment fees and the cost of installments — and divide it by (1 − the margin you want). Do not multiply by the margin: that calculation is markup, and it always leaves you below what you thought you were making.
| Total cost of the unit | Target margin | Divisor (1 − margin) | Selling price | Profit per unit |
|---|---|---|---|---|
| $12,000 | 25% | 0.75 | $16,000 | $4,000 |
| $12,000 | 30% | 0.70 | $17,143 | $5,143 |
| $12,000 | 40% | 0.60 | $20,000 | $8,000 |
| $12,000 | 50% | 0.50 | $24,000 | $12,000 |
If you're here, you want to know how to calculate a product's selling price and get it right. Good news: the formula fits on one line. Bad news: 90% of people selling online in Argentina apply it wrong — not because they're bad with numbers, but because they forget half their costs. They set a price, see that it "sold," and only at the end of the month find out they were losing money on every sale.
⚡ The formula, fast
Selling price = Total cost ÷ (1 − Target margin)
If your total cost is $10,000 and you want a 30% margin: 10,000 ÷ (1 − 0.30) = $14,285. Done. The problem is never the formula. The problem is what you put inside "total cost" — and that's where the money gets lost.
The mistake that loses you money: "cost" isn't what you paid the supplier
When someone works out what a product costs them, they almost always think of one thing: what they paid the supplier. And they've already started out losing. In a LATAM e-commerce store, the real cost of selling one unit includes much more than the purchase cost.
These are the costs you have to add up before applying your margin:
- Product cost — what you pay the supplier (the only thing almost everyone counts).
- Shipping — Correo Argentino, Andreani, OCA or whoever you use. If you offer "free shipping," you pay that cost.
- Platform fee — Mercado Libre charges you between 13% and 19% depending on the category; Tiendanube/Shopify add their share.
- Mercado Pago fee — the payment gateway takes its percentage on every charge.
- Interest-free installments — if you offer them, you absorb the financing cost, and it can eat 5-15% of the price.
- Gross receipts tax (IIBB), perceptions and withholdings — depending on your province and tax status, they're deducted from every sale.
- Packaging and operations — boxes, labels, your team's time.
Add all of that up and only then do you have your real total cost. The gap between supplier cost and real total cost is usually 30% to 50% of the price. That's why so many people "sell well" and have nothing left: they're pricing on half their costs.
How to calculate profit margin (and why it isn't the same as markup)
Here's a confusion that costs money: margin and markup are not the same, and mixing them up leaves you with the wrong prices.
- Markup is how much you add to the cost. $10,000 cost + 50% markup = $15,000.
- Margin is what percentage of the final price is profit. In the example above, the $5,000 profit on a $15,000 price is a 33% margin — not 50%.
If you want a real 30% margin, adding 30% to the cost isn't enough. You have to use the formula above: divide total cost by (1 − 0.30). To go deeper, read our guide on how to calculate profit margin.
A real example with Argentine numbers
You sell a backpack. Here's what it really costs to get it out the door:
- Supplier cost: $10,000
- Shipping (you pay it, "free shipping"): $3,500
- Mercado Libre fee (~14%): depends on the final price
- Mercado Pago fee + installments: depends on the final price
- IIBB + packaging: $1,500
The fixed costs alone already add up to $15,000 — before fees, which are a percentage of the price. If you priced it at "cost + 30%" ($13,000), you'd lose $2,000 on every sale and wouldn't even notice until month-end close. That's why the right calculation includes ALL costs, and the percentage-based ones (fees, installments) are handled by solving for the price. It's exactly the math most people get wrong.
How do you price a product when you sell on several channels?
This is where it really gets complicated. The same product doesn't cost you the same on Mercado Libre as on your Tiendanube store: fees change, Mercado Libre Full adds storage fees, and installments hit differently. Setting the same price everywhere is a guaranteed way to lose money on at least one channel.
The right question isn't "how much do I add to the cost?" but "how much do I keep, clean, on each channel after every cost?". To answer that you need to see the real contribution margin by product and by channel — not the theoretical margin you typed into a spreadsheet.
And watch out for the hidden costs you never quite get loaded right: Mercado Pago fees and the cost of offering installments are the ones that most quietly drag your margin down.
Why your Excel spreadsheet lies to you (and what to do about it)
You can calculate the perfect selling price today in a spreadsheet. The problem is that tomorrow the supplier cost changes, the day after Mercado Libre updates its fees, next week you run a promo with installments, and your spreadsheet goes stale without you noticing. You're back to pricing on old data.
Escalafy connects Tiendanube, Shopify, Mercado Libre, Mercado Pago and your ads, and calculates the real total cost and real margin of every product in real time — with fees, installments, shipping and IIBB already subtracted. You stop pricing blind: you see exactly how much each sale leaves you, on each channel, today.
Check the real profitability by product and the Mercado Libre fee breakdown to understand what you keep before you set the price.
Frequently asked questions
What's the formula for calculating selling price?
Selling price = Total cost ÷ (1 − Target margin). The key is that "total cost" includes product, shipping, platform and gateway fees, installments, IIBB and packaging — not just what you paid the supplier.
How do I price a product to sell on Mercado Libre?
First add up the total cost including the Mercado Libre fee (13-19% depending on the category), the Full cost if you use it, and the cost of installments. Then apply the formula. Since the fee is a percentage of the final price, it's best to solve for it or use a tool that calculates it automatically.
What's the difference between margin and markup?
Markup is what you add to the cost; margin is what percentage of the final price is profit. A 50% markup equals a margin of only 33%. Mixing them up makes you set lower prices than you think.
How do I calculate a product's profit margin?
Margin = (Selling price − Total cost) ÷ Selling price, expressed as a percentage. If you sell at $15,000 with a real total cost of $11,000, your margin is (15,000 − 11,000) ÷ 15,000 = 26.6%.
What profit margin is "good" for an e-commerce store?
It depends on the category, but the trap isn't the target percentage: it's that the real margin (after ALL costs) is usually half the margin people think they have. Better to aim at knowing your exact real margin than to chase a textbook number.
Stop pricing blind. Escalafy shows you the real total cost and margin of every product, on every channel, in real time — with fees, installments and IIBB already subtracted. Try Escalafy free for 7 days, no card required.
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