Separate a price change from its effect
A change in selling price does not produce the same percentage change in the money left after variable costs. Some costs stay fixed per order, while a percentage fee moves with revenue. Follow those components separately before interpreting the effect.
The calculations in this field note use invented USD amounts for a tax-exclusive, one-item order. They are not retailer observations, recommended prices, or a forecast of sales. The goal is to make the arithmetic inspectable.
Work through one order
Start with a $100 selling price, a $70 item cost, $5 fulfilment, and a fee equal to 5% of the selling price. The entered variable costs leave $20 contribution: $100 minus $70 minus $5 minus $5.
At a $90 selling price, the percentage fee becomes $4.50. With the other entered costs unchanged, contribution becomes $10.50. A $10 price reduction has removed $9.50 from the original $20 contribution, a 47.5% reduction.
| Illustrative item | Current | Proposed |
|---|---|---|
| Selling price | $100.00 | $90.00 |
| Item cost | $70.00 | $70.00 |
| Fulfilment | $5.00 | $5.00 |
| 5% fee | $5.00 | $4.50 |
| Contribution | $20.00 | $10.50 |
Name the costs your model leaves out
This simple contribution calculation excludes returns, advertising, fixed overhead, tax, and changes in volume. A payment provider may charge a fixed amount as well as a percentage, or apply a percentage to a different base. Adapt the inputs to the actual fee definition rather than assuming the simplified model is your statement.
Shopify’s documentation describes a basic product margin based on selling price and cost per item. Our calculator adds an entered fulfilment cost and percentage fee, so its contribution rate is a different measure. Name the measure and its included costs whenever you share a result.
Do not confuse a break-even input with a business forecast
For this simplified model, the selling price that covers the entered variable costs is item cost plus fulfilment, divided by one minus the fee rate. With $75 fixed per-order costs and a 5% fee, that is about $78.95.
That number does not cover omitted costs or establish a sustainable business price. It also says nothing about demand. Use the workbench to explore a scenario, then compare the result with your actual cost definitions and operational constraints.
Sources & further reading
This is a practical framework. Numerical examples are illustrative, not observations of a named retailer. Check current platform documentation before applying product-specific requirements.
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