How to price AliExpress products on eBay UK: a formula that covers every cost

How do you price AliExpress products on eBay UK?

To price AliExpress products on eBay you work backwards from every cost to a price that leaves the profit you want, then check that buyers will pay it. The common mistake is to multiply the AliExpress price by two or three and hope. That ignores shipping and import costs, eBay fees on the final price, postage to your buyer and returns, which together often cost more than the product itself.

A simple formula fixes this:

Price = (landed cost + postage + packaging + returns allowance + target profit) ÷ (1 − fee rate − ad rate)

Here "price" means the total the buyer pays, including any postage you charge, because eBay's fees are worked out on that total. If you charge postage separately, the item price plus postage together must reach the figure.

The rest of this guide explains each part. This assumes you are selling stock you hold in the UK. eBay's drop shipping policy allows dropshipping from a wholesale supplier, but listing an item and then buying it from another retailer or marketplace that ships directly to your buyer is not allowed. Whatever your model, you remain responsible for delivery and for your buyer's satisfaction.

What goes into landed cost?

Landed cost is what one unit costs you once it is on your shelf in the UK. It is the base of every price.

• Unit price from the supplier, for the quantity you are ordering.
• Shipping to the UK, shared across the units in the shipment.
• Import VAT, if you are not VAT registered and cannot reclaim it.
• Customs duty, which depends on the product's commodity code.
• Carrier or customs agent fees for handling the import.
• Payment costs, such as a card's foreign transaction charge.
• Write-offs, for units that arrive faulty and cannot be sold.

Exchange rates matter too. AliExpress prices are often set in dollars or converted at checkout, so the same order can cost a different amount in pounds from one month to the next. Use the amount that actually left your account, not the price shown when you first looked, and recalculate landed cost for every new batch.

Divide the total by the number of sellable units. Our guide to import VAT on AliExpress orders explains the VAT and duty lines.

Why divide by fees instead of adding them?

eBay's fees are charged as a share of the total sale amount, so they rise as your price rises. If you work out the fee on your costs and add it, the fee on the final, higher price is bigger than you allowed for, and you fall short on every sale.

Dividing by one minus the fee rate solves this. It finds the price at which, after the fee is taken from the full amount, exactly what you need is left. The same applies to promoted listings: with a general campaign, eBay says the fee is the ad rate as a percentage of the item's total sale amount, including item price, postage and taxes, charged when the item sells within 30 days of a click. So the ad rate goes in the divisor too.

eBay fees vary by category for business sellers, and they change. Check your categories on eBay's selling fees page, and use your own invoices to find the effective rate you really pay. If you are not VAT registered, include any VAT on fees in that rate; our guide to VAT on eBay fees explains why.

A worked example: pricing a silicone baking set

Example: suppose a hypothetical seller who is not VAT registered imports silicone baking sets. Every figure is invented for the arithmetic, and the fee and ad rates are hypothetical rates, not eBay's actual rates.

Check: at £15.49, fees and ads at 16% come to £2.48. Take that and the £8.80 of costs from £15.49 and £4.21 is left, slightly above the £4.00 target because of rounding up.

Notice how little of the price is the product itself. The landed cost is under a third of what the buyer pays; postage, fees, packaging, returns and profit make up the rest. That is typical for small, cheap items, and it is why a low supplier price alone does not make a product profitable.

If the seller had added 16% of the subtotal instead, the price would have been £14.85, and the profit would have fallen short of the target on every sale.

How does VAT change the price?

If you are VAT registered and the product is standard-rated, part of every sale price is VAT you pay to HMRC. Your formula then needs one more step: work out the price before VAT as above, then add VAT at the current rate shown on gov.uk's VAT rates page.

Being registered also changes your costs. You can usually reclaim VAT on business purchases, including import VAT and VAT on eBay fees, so those come out of your landed cost and fee rate. Zero-rated goods, such as most books and children's clothes, carry no VAT on the sale. Registration becomes compulsory once your VAT taxable turnover for the last 12 months goes over £90,000.

The practical point: re-price your whole range when your VAT status changes. A price that worked before registration can leave you with little profit after it.

How do you check the price against the market?

A formula tells you the lowest price that works for you. The market tells you whether buyers will pay it.

1. Search sold listings on eBay.co.uk for the same or similar product and note the typical sold price including postage.
2. Compare like with like. UK stock with fast dispatch can often sell above slower overseas listings.
3. Decide where you sit. If your price is near the market, list. If it is far above, improve your costs or drop the product.
4. Look for ways to add value. A bundle, better packaging or clearer instructions can justify a higher price.

If you are comparing many AliExpress products, the profit calculator in Dropizon Global helps you shortlist the ones whose margins survive eBay fees, before you check samples and your own figures.

Set a floor price too

The same formula with a target profit of zero gives your break-even price: the lowest price at which a sale covers its costs. In the worked example above, costs of £8.80 divided by 0.84 give a break-even of about £10.48. Write the floor down for each product. If you ever run a sale, accept an offer or match a competitor, never go below it, because every sale under the floor loses money. A floor also tells you how much room you have to compete if more sellers start listing the same item.

Best Offer and multi-buy discounts

If you accept offers or give multi-buy discounts, run the discounted price through the same check. A discount on a two-item order may still work because you save on postage and packaging, while the same discount on a single item may not. Set your automatic accept and decline levels with the floor price in mind.

Which pricing mistakes cost AliExpress sellers most?

• Pricing from the listing price. The product page price leaves out shipping, VAT, duty and fees.
• Adding fees instead of dividing. This underprices every item, as the example shows.
• Forgetting promoted listing fees. They come out of the sale total like other fees.
• No returns allowance. Even good products come back sometimes; a small amount per unit pays for it.
• Not re-pricing new batches. A new batch at a different price or exchange rate changes your landed cost.
• Racing to the bottom. Cutting price to match the cheapest seller can leave you working for nothing. Compete on speed and quality instead.

A quick checklist

• Work out landed cost per sellable unit for each batch.
• Add postage, packaging, a returns allowance and your target profit.
• Divide by one minus your effective fee and ad rates.
• Add VAT if you are registered and the item is standard-rated.
• Round up, then compare with real sold prices on eBay.co.uk.
• Recalculate when costs, fees or your VAT status change.