Guide 04
Product costing and margins: how to price for profit
To price a consumer product for profit, calculate the full landed cost of each unit first, then set a price that leaves a margin in every channel you plan to sell through.
Cost and Margins is step four of Cydney Mar's Concept-to-Reality Pathway: build for real profit and scalability, and learn to calculate costs properly. This Concept to Shelf guide breaks down landed cost, explains margin versus markup, and includes a calculator you can use with your own figures.
Published by Cydney Mar. Last updated November 2026.
On this page
How do I calculate the cost of my product?
Calculate your product cost as landed cost per unit: everything you pay to get one finished unit to where you sell it, divided across the order. The factory price is only the start.
| Cost component | What it includes | Often missed? |
|---|---|---|
| Materials | Fabric, ingredients, components, trims | Rarely |
| Labor | Cutting, sewing, assembly, filling | Rarely |
| Packaging and labels | Boxes, hangtags, inserts, regulated labels | Sometimes |
| Samples and testing | Sample rounds and any required testing, spread over the order | Often |
| Freight | Shipping from the factory to your warehouse | Often |
| Duties and fees | Import duties, brokerage and handling | Often |
What is the difference between margin and markup?
Definition
Margin and markup, with one worked example
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. A product with a landed cost of $10 that sells for $25 earns $15 in gross profit. That is a 60% margin and a 150% markup.
Retail buyers usually talk in margin. If you set prices using markup alone, you may believe you have more room than you do. Concept to Shelf recommends planning in margin and checking markup as a second view.
Margin calculator
Enter your own landed cost and selling price. The calculator uses only the figures you type, and you can use it once per channel, for example your wholesale price and your DTC price.
Enter both figures and select Calculate margin to see gross profit, margin and markup.
How do margins differ across retail, DTC and TV?
Each channel takes a share of the shelf price in a different way, so the same product can be profitable in one channel and not in another.
- Retail: you sell at a wholesale price and the retailer adds its own margin on top, so your landed cost must leave room for both.
- DTC: you keep the full selling price but pay for shipping, platform fees, returns and marketing yourself.
- TV shopping: the product must demonstrate well and supply must be ready for demand; confirm the commercial terms directly with the network.
Cydney Mar has sold through all three, including 15+ years of her own collections on QVC in 8 countries.
What raises or lowers the cost of a product?
- Order quantity: larger runs usually lower the unit cost but tie up more cash.
- Material choices: a small change in fabric or component can change cost noticeably.
- Sample rounds: every extra round adds cost and time; complete specs reduce rounds.
- Packaging: custom packaging can cost more than expected at low volumes.
- Freight and duties: these depend on where the product is made and sold.
Why does pricing matter more now?
Shoppers are watching prices closely. Salsify consumer research reports that 39% of shoppers are comparing prices more carefully before purchasing, and that only 9% spend online daily and 21% shop weekly. The same research reports that high product quality and value are enough to influence 67% of consumers to trust a brand.
Source: Salsify, The Top 10 Consumer Trends To Watch in 2026.
Back to the main guide: what a consumer product development consultant does and when to hire one.
Common questions
How do I calculate the cost of my product?
Calculate product cost as landed cost per unit: materials, labor, trims and packaging, plus freight, duties, and testing or sample costs spread across the order. Founders often stop at the factory price and miss the rest. Cydney Mar's Cost and Margins step focuses on learning to calculate costs properly so the product is built for real profit and scalability.
What is the difference between margin and markup?
Margin is profit as a share of the selling price; markup is profit as a share of the cost. A product that costs $10 and sells for $25 earns $15, which is a 60% margin and a 150% markup. Retailers usually talk in margin, so pricing with markup alone can leave less room than expected. The calculator on the costing page shows both.
When should I work out my margins?
Work out margins before you approve a final sample, ideally before you brief a factory at all. Once a product is designed, materials and construction are largely locked in, so cutting cost later is hard. Cydney Mar lists ignoring margins until it is too late as one of the common reasons product ideas stall, alongside sampling without clarity.
Are shoppers comparing prices more carefully now?
Yes. Salsify consumer research reports that 39% of shoppers are comparing prices more carefully before purchasing, and that only 9% spend online daily and 21% shop weekly. For a founder, that means price and perceived value need to be planned at the costing stage rather than adjusted after launch.
Should I launch in retail, DTC or on TV first?
Start with the channel your margins and story suit best. DTC gives you control and direct feedback. Retail brings reach but needs wholesale pricing and dependable supply. TV shopping suits products that demonstrate well on camera. Cydney Mar has sold through all three, including 15+ years of her own collections on QVC in 8 countries.