Most pricing advice for digital products starts with what other sellers charge. That is useful, but it skips a step. Before you compare, you need to know the lowest price that still pays you what you want once every fee is taken off. This guide shows how to work that out, then how to decide how far above it to go.
Revenue, profit and margin
Three words get mixed up all the time:
- Revenue is what the customer pays.
- Profit is what is left after the costs of that sale.
- Profit margin is profit as a percentage of the price.
Say a planner sells for £8.00, the platform and payment fees add up to 10.5% of the price, and there is a £0.20 fixed fee on each sale. The figures in this guide are examples only, not any platform's real fees.
| Revenue | £8.00 |
|---|---|
| Percentage fees (10.5%) | −£0.84 |
| Fixed fee | −£0.20 |
| Profit | £6.96 |
| Profit margin | 87.0% |
The costs that come out of every sale
Digital products have no printing or postage, so it is easy to think a sale is almost pure profit. Three kinds of cost still apply:
- Percentage fees, taken by the marketplace and the payment provider. They grow as your price grows.
- Fixed fees, a flat amount on each sale or listing. They take a much bigger share of a cheap product: £0.20 is 13.3% of a £1.50 price but only 1.7% of £12.00.
- Other costs per sale, such as advertising or a licence that charges you each time you sell.
Costs that do not depend on each sale, like design software or the hours you spent making the product, are better handled separately. Add them to your monthly profit goal, or work out how many sales it takes to cover them.
Why you cannot just add the fees on top
Suppose you want to keep £5.00 from each sale. A common shortcut is to add the fixed fee, then add 10.5% on top: £5.20 × 1.105 = £5.75. But at £5.75 the percentage fees are 10.5% of the higher price, about £0.60, so you keep about £4.95, not £5.00.
The fees are a share of the final price, so the price has to be worked out in one step:
Price for a target profit = (fixed costs + target profit) ÷ (1 − percentage fees) (£0.20 + £5.00) ÷ (1 − 0.105) = £5.8101, so the minimum is £5.82
Target profit or target margin?
You can aim for a fixed amount of profit per sale, or for a margin. They answer different questions.
- A target profit says how much money each sale should bring you. It links directly to income goals: "I want to keep £5 from every planner".
- A target margin says what share of the price you keep. It is useful for comparing products at different prices, but it says nothing about how much money you make.
That second point matters. With a 70% margin target and only a £0.20 fixed fee, the formula below gives a minimum price of just £1.03. You would hit your margin, but keep only about £0.72 per sale.
Price for a target margin = fixed costs ÷ (1 − percentage fees − target margin) £0.20 ÷ (1 − 0.105 − 0.70) = £1.0256, so the minimum is £1.03
If you use a margin target, check the profit per sale it produces as well.
The two worked examples below put both formulas to use.
Worked example 1: a target profit
You are pricing a weekly planner. You want to keep £4.00 per sale. Fees are 6.5% to the platform and 4% for payment processing, with a £0.20 fixed fee, and you expect advertising to cost about £0.30 per sale.
- Fixed costs per sale: £0.20 + £0.30 = £0.50.
- Percentage fees: 6.5% + 4% = 10.5%.
- Minimum price: (£0.50 + £4.00) ÷ 0.895 = £5.0279, so £5.03.
- Round up to a familiar price: £5.99.
- Check it: at £5.99 the fees and costs total £1.13, leaving about £4.86 profit, an 81.2% margin.
£5.03 is your floor. Whether to charge £5.99, £6.50 or more is now a separate decision based on what you offer compared with similar products: the number of pages, the quality of the previews, the instructions, and how specific the product is to the buyer's need.
Worked example 2: a target margin
You sell a template pack and want a 75% margin. Each sale has more costs this time: the same 10.5% in percentage fees and £0.20 fixed fee, plus a £0.60 per sale licence for the fonts you used and about £0.50 of advertising.
- Fixed costs per sale: £0.20 + £0.60 + £0.50 = £1.30.
- Minimum price: £1.30 ÷ (1 − 0.105 − 0.75) = £1.30 ÷ 0.145 = £8.9655, so £8.97.
- Check it: at £8.97 the costs total £2.24, leaving £6.73 profit, a margin of 75.0%.
- Round to £8.99 and the margin is still just over 75%.
Notice how quickly the price climbs as the margin target rises. With the same costs, an 80% margin needs at least £13.69. And because percentage fees already take 10.5% of every sale, no price can reach a margin of 89.5% or more.
Check your platform's current fees
Fees change, and they can depend on your country, payment method and account. Before you rely on any figure, check your platform's own fee pages, for example Etsy's fees and payments policy or Gumroad's pricing page. This site is independent and is not affiliated with either.
Common pricing mistakes
- Forgetting the fixed fee on cheap items. It can take a large share of a low price.
- Adding percentage fees on top instead of solving for the price, which always leaves you a little short.
- Pricing by margin alone, which can produce a price that hits the percentage but earns very little.
- Leaving out advertising. If you pay for ads, divide your ad spend by the sales it produced to get a cost per sale.
- Only matching the cheapest listings. Competing on price alone leaves little room for fees, and the lowest price is not always what buyers choose.
- Never revisiting the price. Fees change, and so do your costs. Check your numbers again when they do.
Work out your own price
The Pricing Calculator does the sums above for you, for either a target profit or a target margin, and suggests a rounded price. Once you have chosen a price, the Profit Calculator shows the full breakdown of what each sale earns, and how much you would make over a month of sales.
Every figure here is an estimate based on example fees. Check the current fees on your own platform's fee page, and remember that no price guarantees sales.