How to Price Your Product After Sourcing from China: Margin Calculations

You sourced a great product from China. Now comes the hard part: precios it so you make money and customers still hit “buy.” This guide walks you through the numbers. You’ll learn how to calculate landed cost, margins, break-even price, and a practical example with real dollars.

Step 1 — Calculate landed cost (the non-negotiable base)

Landed cost is the total cost to get one unit into your warehouse or fulfillment center. If you skip items here, your “profit” will vanish fast.

Factory price (FOB or EXW)
International freight (air or sea)
Insurance
Customs duty (percent of CIF)
Customs clearance and broker fees
Inland transport to your warehouse
Packaging, labeling, and inserts
Calidad control, inspection, and samples (amortized per unit)
Bank or payment fees and currency conversion

Basic formula: Landed cost per unit = product unit price + freight + insurance + duties + clearance + domestic transport + packaging + QC per unit + payment fees.

Example landed cost (per unit)

Factory price (FOB): $3.00
Sea freight (per unit): $0.30
Insurance: $0.02
Customs duty (4% of CIF = 4% of 3.32): $0.13
Customs broker & clearance: $0.10
Inland transport: $0.15
Packaging & labeling: $0.20
Quality control amortized: $0.05

Total landed cost = $3.95 per unit.

Step 2 — Add fulfillment and selling costs

Once the product is in your warehouse, other costs hit every sale. Include marketplace fees, fulfillment (FBA or 3PL), payment processing, advertising, returns, and storage.

Marketplace / referral fee (e.g., Amazon)
Fulfillment / pick-pack / shipping to customer
Payment processing (card fees)
PPC / marketing cost per sale
Return and warranty reserve
Storage fees (amortized monthly)

Example added costs

Amazon FBA fees: $3.00
Transaction fee (2.9% + $0.30 on $19.99): $0.88
Storage & handling amortized: $0.20
PPC acquisition cost per sale: $3.00
Returns reserve (2% of price): $0.40

Additional per-sale costs = $7.48.

Step 3 — Gross margin, markup, and break-even

Know your targets. Gross margin defines profitability per sale. Markup is how much above cost you price the product.

Gross profit = Selling price − Total cost per sale
Gross margin (%) = (Gross profit ÷ Selling price) × 100
Markup (%) = (Selling price − Cost) ÷ Cost × 100

Concrete example

Target selling price: $19.99

Total cost per sale = landed cost ($3.95) + additional costs ($7.48) = $11.43.

Gross profit = $19.99 − $11.43 = $8.56.

Gross margin = $8.56 ÷ $19.99 = 42.8%.

Markup on cost = $8.56 ÷ $11.43 = 74.9% (or price is 1.749× your cost).

Break-even price for a target margin

If you want a 40% gross margin, price must cover cost divided by (1 − margin%).

Break-even price = Total cost ÷ (1 − Target margin).

With cost $11.43 and target margin 40%: Break-even = $11.43 ÷ 0.60 = $19.05.

So pricing at $19.99 gives a little buffer above the $19.05 needed for 40% margin.

Practical pricing tips

Add a 5–10% contingency to landed cost for currency swings or surprise fees.
Negotiate MOQs and packaging with the supplier to lower per-unit cost.
Test different price points. Small price moves can change conversion and profit significantly.
Track CAC (customer acquisition cost) separately from product cost.
Consider tiered pricing for wholesale vs retail. Wholesale margins are lower but volume is higher.
Use a simple spreadsheet to model scenarios: cost increases, duty changes, or higher freight.

Quick checklist before you set the listing price

Have confirmed FOB or EXW price in writing.
Know exact HS code for duty estimates.
Booked freight and quoted per-unit shipping cost.
Included broker, insurance, and domestic transport fees.
Estimated marketplace and payment fees accurately.
Set target margin and compute break-even price.
Build a contingency buffer (5–10%).

Final thought

Pricing after abastecimiento from China is math plus market sense. Get every cost into your landed cost. Add selling and marketing costs. Then pick a price that meets your margin goals and fits the market. If spreadsheets aren’t your favorite thing, Supplier Ally can help run the numbers and source suppliers so you can focus on selling. Visit sourcingall.com to learn how.