7 Cost-Based Pricing Strategies for Shopify Merchants

Before you chase competitors, does each order clear your true landed cost after Shopify fees, shipping, and returns? These seven models help DTC brands set a defensible profit floor.

1. Markup pricing

Add a fixed percentage to unit cost. Insulated bottles at $18 with a 75% markup → $31.50 retail. Fast for catalogs; weak when demand shifts.

2. Cost-plus pricing

Add margin on the full job cost. A logo tote run costs $420 for 50 units; 30% margin → $546 total ($10.92 each). Strong for MOQ or made-to-order SKUs.

3. Break-even pricing

Cover fixed + variable costs with zero profit. A pet treat box has $1,800/month overhead and $9 COGS per box. At 300 subscribers, break-even is $15/box.

4. Target-return pricing

Hit a return goal on launch spend. Invest $28,000 in a gummy line, want 12% ROI, expect 1,500 units with $42,000 production cost → about $30.24 per unit.

5. Absorption costing

Spread factory overhead into each unit. Candles cost $4.50 in wax and labor; $3,600 rent on 1,200 units adds $3 each. Absorbed cost $7.50; 40% margin → $10.50.

6. Contribution margin pricing

Price so each sale funds fixed costs. A clearance skate deck at $42 variable cost with 35% contribution margin → $42 ÷ 0.65 ≈ $65.

7. Keystone pricing

Double wholesale. Linen napkins at $14 sell at $28. Consistent and quick—risky when wholesale is inflated or the category is price-sensitive.

Beyond the floor

Cost-based math protects margin; it does not tell you when to move price. Use sequential optimization instead: one live Shopify price, small steps inside min/max bounds, and compare results period by period.

Install on Shopify · Getting started

Final thoughts

Pick the model that matches how you buy and fulfill. Then improve price in small steps above the floor you trust.