How to Price Your Products Correctly in E-Commerce — Complete Guide
The Mistake That Costs You All Your Profits
"Product costs me SAR 50, I sell it for SAR 80. That's SAR 30 profit."
Wrong.Because you forgot:
- Platform commission (Salla, Zid, Shopify)
- Payment gateway fees (Moyasar, Tap, Tabby)
- 15% VAT
- Shipping cost
- Packaging cost
- Returns (5-15% of orders)
The Fees You Must Account For
1. Platform Commission
Every platform takes a cut from each sale:
- Salla: Free plan 0% commission, paid plans charge monthly subscription with no commission
- Zid: Depends on plan — from 0% to 2%
- Shopify: 0.5% - 2% depending on plan + fixed fees
- WooCommerce: Free (but you pay for hosting + plugins)
2. Payment Gateway Fees
Every electronic payment has fees:
- Moyasar: 1.85% + SAR 1 per transaction
- Tap: 2.65% + SAR 1
- HyperPay: 2.5% - 3.5%
- Tabby (BNPL): 4% - 6% — higher because they assume installment risk
- PayPal: 3.49% + SAR 2.49
3. Value Added Tax (VAT)
In Saudi Arabia and UAE: 15% and 5% respectively.
Important: VAT is added on top of the final selling price. If your price is SAR 100, the customer pays SAR 115. The SAR 15 goes to the tax authority — not to you.4. Shipping Cost
If you offer free shipping — you're paying:
- Same-city delivery: SAR 15-25
- Inter-city shipping: SAR 25-40
- Express shipping: SAR 35-60
5. Packaging
Box + filler + stickers + thank you card = SAR 3-8 per order.
The Correct Pricing Formula
Instead of calculating manually, here's the formula:
Selling Price = (Product Cost + Shipping + Packaging + Fixed Fees) / (1 - Platform Rate - Payment Rate - Target Margin)Practical Example:
- Product cost: SAR 50
- Shipping: SAR 20 (if offering free shipping)
- Packaging: SAR 5
- Fixed payment fee: SAR 1
- Platform rate: 0%
- Payment rate: 2.65%
- Target profit margin: 30%
Suggested selling price: SAR 113 (before tax) Customer price after VAT: SAR 129.95
Smart Pricing Strategies
Psychological Pricing
- 99 instead of 100: Customers perceive it as "nineties" not "a hundred"
- In Saudi Arabia: SAR 95 or SAR 99 are most common
- For premium products: Round numbers work better (SAR 500 not 499)
Bundle Pricing
Instead of selling one product for SAR 100, sell 3 for SAR 250. The customer feels they're saving, and you increase average order value.Free Shipping Threshold
"Free shipping on orders above SAR 200" — motivates customers to add more items to reach the threshold.Don't Calculate by Hand — Use the Calculator
We built a Product Pricing Calculator specifically for store owners in Saudi Arabia and the Gulf.
Enter product cost, shipping, platform, payment gateway, and target margin — get the suggested selling price, tax amount, and actual net profit.
Try the calculator free — no signup required.After Pricing — Let Customers Know
After pricing correctly, the most common question will be: "How much with shipping?" and "Is there tax?"
Instead of answering manually, RaddBot answers pricing and shipping questions automatically — 24 hours in Arabic.
Join the waitlist.