How to Price Bedding in Canada: A Margin-First Method

Start From the Margin You Need

Start with the profit requirement, not a competitor’s ticket price. Markup and margin are different measures: markup divides profit by cost, while margin divides profit by selling price. If a bedding set costs $80 and sells for $200, profit is $120, markup is 150% ($120 ÷ $80), and gross margin is 60% ($120 ÷ $200). The same price therefore produces two different percentages.

Work backwards from the margin your store needs. If the full per-unit cost is $80 and the required gross margin is 60%, the price before tax is $80 ÷ (1 − 0.60) = $200. Build that cost figure from the economics of the sale, including the product cost and the variable costs your margin policy assigns to each order. Then check what remains after advertising and other selling costs before approving the price.

Use markup for a quick cost-based pricing rule; use margin to judge how much of revenue remains to cover overhead and profit. Contribution after advertising is the action measure when deciding whether a product can support paid acquisition. These are not interchangeable. A competitor’s observed price tells you what they display, not their costs, return rate, channel mix, or required margin. Test your own assumptions in the product pricing calculator, then compare the result with your store’s realized unit economics.

Build the Complete Cost Base

Build the cost base around one delivered order, not the store’s total expense sheet. Include the bedding item’s landed product cost, manufacturing or wholesale cost, packaging, inbound freight and duties, then add fulfilment labour, pick-and-pack materials, payment processing, outbound shipping and the expected cost of returns. Include discounts, coupons, affiliate commissions and any advertising cost you assign to acquiring that order. If a customer pays shipping, subtract that recovered amount from shipping expense rather than ignoring either side.

Product margin answers whether the item itself is priced above its product cost: a $180 set with a $70 landed cost has $110 product gross profit, or 61.1% product margin. It is the right measure for merchandise pricing, sourcing and assortment decisions. Contribution margin goes further: subtract the variable fulfilment, payment, shipping, return and promotional costs. If those costs total $50, contribution is $60, or 33.3% of the $180 price. Use it when deciding whether to promote, scale or keep selling the item.

Do not allocate rent, salaries, software subscriptions or general management overhead to one duvet or sheet set. Those fixed costs matter for total-store profitability, but spreading them across products can make a viable item appear unprofitable and distort the price decision. Calculate margins before sales tax: the CRA says tax follows the delivery province, for example, Ontario deliveries use 13% HST, and GST/HST rates should not be treated as product revenue. Test the inputs in the product pricing calculator.

Show the Price Correctly in Canada

Set the customer-facing product and cart price in Canadian dollars (CAD), and label it clearly, for example, CAD 249.00. Show GST/HST as a separate checkout line instead of treating the tax-inclusive total as the selling price. Record revenue before GST/HST; tax collected is not product revenue. Keep each order record with the CAD price, delivery province, applicable tax rate, tax amount and total.

The Canada Revenue Agency says that for goods sold and shipped to another province, the place of supply is where the goods are delivered, so that province’s GST/HST rate applies. Its listed rates are 5% GST in Alberta, British Columbia, Manitoba, Quebec, Saskatchewan and the territories; 13% HST in Ontario; 14% HST in Nova Scotia from April 1, 2025; and 15% HST in New Brunswick, Newfoundland and Labrador and Prince Edward Island. The CRA also says most businesses remain small suppliers and do not have to register while taxable supplies do not exceed $30,000 over four consecutive calendar quarters. Document the basis for your treatment and confirm your registration position with the CRA (Source: Canada Revenue Agency).

Read the Worked Example by Comparing Measures

Read the worked example in two views. The tax-inclusive price is what the customer sees and pays; the tax-exclusive price is the amount available to measure revenue and profitability. Tax collected is not gross profit. The applicable rate depends on the delivery province: the Canada Revenue Agency lists 5% GST in Alberta, 13% HST in Ontario and 15% HST in New Brunswick, Newfoundland and Labrador, and Prince Edward Island, among other rates (Source: Canada Revenue Agency).

Start with the tax-exclusive selling price, subtract the example’s landed cost, and compare the result with the displayed gross profit. Then divide gross profit by tax-exclusive revenue to read gross margin. Price answers what the shopper pays; landed cost answers what the order costs; gross profit answers dollars left before operating expenses; margin answers how efficiently each revenue dollar covers those costs. Use the inclusive view for checkout accuracy and the exclusive view when deciding whether the price meets your target. The product pricing calculator can keep those measures separate.

Showing the price in Canada

Use the delivery province, not your warehouse or store address, to determine the applicable GST/HST on an order shipped within Canada. The Canada Revenue Agency states that the place of supply is where the goods are delivered; goods delivered in Ontario, for example, are charged 13% HST. Its listed rates are 5% GST in Alberta, British Columbia, Manitoba, Quebec, Saskatchewan and the territories; 13% HST in Ontario; 14% HST in Nova Scotia from April 1, 2025; and 15% HST in New Brunswick, Newfoundland and Labrador and Prince Edward Island (Source: Canada Revenue Agency).

Your registration status also affects how you present the transaction. The CRA says most businesses remain small suppliers and do not have to register while taxable supplies do not exceed $30,000 over four consecutive calendar quarters. Confirm your position with the CRA or an accountant before configuring checkout. For a quick pricing check, run the tax-inclusive and tax-exclusive arithmetic through the product pricing calculator, then compare the result with the Canada selling guides.