Selling Price Calculator

How to Use the Final Selling Price Calculator?

When pricing your products for sale, it’s essential to factor in all costs and expenses to ensure you don’t underprice and lose money or overprice and lose customers. Our calculator helps you determine the final selling price by including cost price, return-related losses, shipping costs, taxes, and discounts like coupons and loyalty points.

When pricing your products for sale, it’s essential to factor in all costs and expenses to ensure you don’t underprice and lose money or overprice and lose customers. Our calculator helps you determine the final selling price by including cost price, return-related losses, shipping costs, taxes, and discounts like coupons and loyalty points.

Here’s a step-by-step guide on how to use this calculator correctly — along with precautions to keep your pricing accurate.

1. Enter the Correct Cost Price (Exclude ITC if Applicable)

Your starting point is the cost price of the product.

• If you are a GST-registered business and can claim Input Tax Credit (ITC), your cost price should exclude GST because you’ll get that GST amount back from the government.
  For example, if your supplier invoice shows ₹1180 including 18% GST, your actual cost price to enter is ₹1000 (1180 ÷ 1.18).

• If you are under the GST Composition Scheme, not registered for GST, or your business cannot claim ITC, keep the full cost price including GST as your expense.

Why this matters: Including GST when you can claim ITC inflates your costs artificially and lowers your calculated profit margin, leading to inaccurate pricing decisions.

2. Add Cost Due to Product Returns

Returns can be a hidden but significant cost, so it’s important to factor them in correctly. Our calculator divides returns into two types, based on the inputs you provide:

• Return Ratio: This is the overall percentage of products returned out of total sales. For example, if 20% of your products are returned, enter 20%.

• Full Return Loss: This occurs when customers return products that cannot be resold, such as duplicates, damaged, or used items. This loss is equal to the full cost of the returned products. Out of the total returned products, this percentage represents the portion that results in a complete loss. For example, if 50% of the returns are full losses, then 50% of the 20% returns are fully lost.

• Partial Return Loss: This includes indirect costs related to returns, like repackaging, product inspection, shipping charges for returns, payment gateway charges on refunds, and administrative expenses. The remaining returns (in this case, the other 50%) can be resold but still incur these additional costs. This is entered as an average return cost per returned item.

How the Calculator Uses These Inputs:

• It calculates the full return loss cost by multiplying the cost price by the return ratio and the full loss return percentage.

• It calculates the partial return loss cost per unit by multiplying the average return cost by the remaining return percentage (return ratio minus full loss return percentage), then dividing by 100 to get the per-unit cost.

• These two values are then added together to give the total return-related cost per unit, which is added on top of your base cost price.

Example:

• Cost price: ₹1000 per unit
• Return ratio: 20% (meaning 20 out of every 100 units are returned)
• Full loss return: 50% of returned units are full loss (i.e., 50% of those 20 units, which is 10 units)
• Partial loss return: 50% of returned units are partial loss (the other 10 units)
• Average partial return cost: ₹30 per returned unit

Calculations:

• Full return loss cost per unit sold:
  • Total full loss units per 100 units sold = 20 * 50% = 10 units
  • Full loss cost for these 10 units = 10 * ₹1000 = ₹10,000
  • Spread over 100 units sold → ₹10,000 / 100 = ₹100 per unit sold
• Partial return loss cost per unit sold:
  • Total partial loss units per 100 units sold = 20 * 50% = 10 units
  • Cost for these partial returns = 10 * ₹30 = ₹300
  • Spread over 100 units sold → ₹300 / 100 = ₹3 per unit sold
3. Include Shipping Cost Accurately

When you offer free shipping on orders above ₹1000, you effectively absorb the shipping cost for those orders. The other orders below ₹1000 pay shipping separately during checkout, so you don’t need to add shipping cost for those orders into your product pricing — they've already covered it.

How to Calculate Shipping Cost in This Case:

• Orders qualifying for free shipping (above ₹1000): 70 orders
• Orders paying shipping at checkout (below ₹1000): 30 orders
• Shipping cost per order: ₹50
• Shipping cost vendor pays for free shipping orders = 70 * ₹50 = ₹3500

Since shipping is already collected from the 30 orders that pay shipping, you only need to include the shipping cost for the 70 free shipping orders in your product pricing.

How to Add Shipping Cost to Your Product Cost:

1. Calculate total shipping cost you absorb = ₹3500
2. Divide this by the total number of units sold in these 70 orders to get the shipping cost per unit.
3. Add this per-unit shipping cost only to the products in the free shipping orders.

Why This Matters:

• You don’t double count shipping cost on orders where customers already paid for it.
• You accurately reflect the actual shipping expense your business absorbs.
• This keeps your product pricing fair and competitive, avoiding unnecessary overpricing.

Quick Example:

• Assume 70 free shipping orders have 2 products each → total 140 products
• Total shipping cost absorbed = ₹3500
• Shipping cost per product = ₹3500 / 140 = ₹25
• Add ₹25 to the product cost for these products only
4. Add Profit, Taxes, and Payment Gateway Charges

Once you have your effective cost price (including base cost, returns cost, and shipping cost), the next step is to calculate the final price including profit and taxes:

• Add your desired profit margin on top of the effective cost. For example, if your effective cost is ₹1200 and you want a 20% profit, multiply:
  Price before tax = 1200 * (1 + 20 / 100)=₹1440

• Add applicable taxes (GST or others) on the price before tax. Taxes might also apply on payment gateway (PG) charges. So:
  Price after tax = Price before tax * (1 + GST / 100) * (1 + PG charges / 100 * (1 + GST / 100))

This gives you the price including taxes and PG charges — the price before any discounts.

5. Apply Discounts (Loyalty Points, Coupons)

To arrive at the final selling price, add any discounts offered to customers, such as:

• Loyalty point discounts: Redeemed points that reduce the price
• Coupon discounts: Promo codes or coupons applied at checkout

Selling price = Price after tax + (Loyalty discount + Coupon discount)

6. Calculate and Display “Compare at Price” (Original Price Before Discount)

To encourage purchases, many websites show a “Compare at Price” — the original price before discounts — which highlights the savings.

You can calculate this by increasing the final selling price by a flat discount percentage that your website claims to offer.

Compare at price = Selling Price * (1 + Flat discount / 100)