Every example and amount on this page is illustrative. It shows the method and is not a benchmark, a quote or advice.
Start From the Margin You Need
Choose the measure before the price. Markup is profit divided by cost: a S$20 product sold for S$40 has 100% markup. Gross margin is gross profit divided by revenue, so the same order has 50% gross margin. Markup sets a basic product spread; gross margin compares economics after product cost. Contribution margin is the amount left after all variable per-order costs, including product cost, shipping, payment and platform fees, fulfilment, expected returns or refunds, and advertising when applicable. If full variable cost is S$30 and target contribution margin is 25%, price = S$30 ÷ (1 − 0.25) = S$40: contribution is 25%, though markup against S$20 product cost is 100%. Test your costs with the product pricing calculator.
| Measure | Formula | Use it when |
|---|---|---|
| Markup | Profit ÷ cost | Setting a starting spread over product cost |
| Gross margin | Gross profit ÷ revenue | Comparing products after product cost |
| Contribution margin | Contribution ÷ revenue | Deciding whether the full order economics can support the price |
Build a Singapore-Ready Cost Base
Build a landed-cost base for each delivered order: supplier product cost, fulfilment or pick-and-pack, inbound and customer shipping, payment processing, platform fees, expected returns and refunds, advertising, and customs duty. Allocate fixed platform costs consistently, and express returns and advertising as expected costs per order. Figures below are illustrative inputs.
Keep GST separate from operating profit. IRAS states Singapore’s current GST rate is 9%; registration is required when taxable turnover exceeds S$1 million for a calendar year, or is expected to exceed it in the next 12 months. For low-value goods, sales value of S$400 or below imported by air or post, a GST-registered overseas supplier charges GST at purchase. Record GST according to your registration and supply position, not as sales income. Test inputs in the product pricing calculator (Source: Inland Revenue Authority of Singapore).
| Cost item | S$ |
|---|---|
| Product cost | 18.00 |
| Fulfilment | 4.50 |
| Shipping | 6.00 |
| Payment fee | 1.20 |
| Platform cost allocation | 1.50 |
| Expected returns/refunds | 2.00 |
| Advertising | 8.00 |
| Duty (example assumption) | 0.00 |
| Total before GST treatment | 41.20 |
Worked example with sample numbers
This example uses sample numbers for a dropshipping home goods store selling in Singapore. They are made up to show the method, they are not a benchmark, and your own figures will differ.
Formula: Net price needed = (variable costs + fixed fee) / (1 - target margin - percentage fee).
| Target margin | Net price needed | Check |
|---|---|---|
| 15.0% | S$38.11 | S$5.72 left per order |
| 25.0% | S$43.43 | S$10.86 left per order |
| 35.0% | S$50.47 | S$17.67 left per order |
| 45.0% | S$60.24 | S$27.11 left per order |
Run the same sum with your own numbers in the free calculator, or browse guides for sellers in Singapore and more dropshipping home goods guides.
General information only: tax, duty and import rules change and depend on your situation, so check with an accountant or the official source before acting.
Eligible Shopify stores can see these numbers for their own store through the Founding 10,000 offer.
Show the Price Customers Actually Pay
Set the customer-facing price in SGD and show the amount payable, not just the product price. If a cushion is S$80, delivery is S$6, a S$5 discount applies, and a S$2 payment surcharge is charged, the checkout total is S$83. Show each component clearly: product S$80, delivery S$6, discount −S$5, surcharge S$2, total S$83. Do not let a low product price hide a delivery charge that changes the buying decision.
Where GST applies, use a GST-inclusive presentation such as “S$87.00 incl. GST.” IRAS states that Singapore’s current GST rate is 9%. A Singapore business must register when taxable turnover exceeds S$1 million for a calendar year, or is expected to exceed S$1 million in the next 12 months, according to IRAS. For imported low-value goods of S$400 or below, IRAS says a GST-registered overseas supplier charges GST at the point of purchase (Source: Inland Revenue Authority of Singapore).
Use the checkout total for the customer-facing comparison. Use delivered-order revenue net of discounts and GST collected for margin analysis; keep delivery income and payment surcharges separate from product revenue, and record their matching costs separately. This prevents a discount-funded sale or pass-through GST from appearing more profitable than it is. Test the figures in the product pricing calculator.
Read the Worked Example by Measure
Read the worked example from the customer-facing number downward. Selling price is what the customer pays, informing checkout and offer decisions, including whether delivery or discounts are visible in the amount collected. Landed cost is one delivered order’s cost before marketing; compare it with selling price to check room to sell profitably.
Gross margin is the share after landed cost: at selling price S$80 and landed cost S$32, gross profit is S$48 and gross margin is 60%; use it to compare economics and set a minimum viable price. Contribution margin subtracts variable selling costs such as advertising to assess another order. Profit after fixed costs subtracts software, salaries or storage from total contribution to assess whether the store covers its operating base. Healthy gross margin can still produce little contribution or overall profit. For a second check, enter the same assumptions in the product pricing calculator.
| Measure | Decision it supports |
|---|---|
| Selling price | What the customer is charged |
| Landed cost | Whether the cost base is acceptable |
| Gross margin | Whether the product has pricing room |
| Contribution margin | Whether paid acquisition is viable |
| Profit after fixed costs | Whether the store covers its operating base |
When a Higher Price Is the Wrong Move
A higher ticket is wrong when conversion falls or acquisition cost rises faster than contribution. Across 100 ad clicks, S$50 at 4% gives 4 orders. With product, fulfilment, shipping and payment cost of S$20 per order and ads at S$10 per order, contribution is (S$50 − S$20 − S$10) × 4 = S$80. Raising the price to S$60 may cut conversion to 2%; the same S$40 ad spend gives (S$60 − S$20 − S$20) × 2 = S$40.
Before raising price, test a clearer delivery promise, checkout improvement, two-item bundle, lower-cost acquisition channel, fewer refunds or better product selection. Bundling can lift order value and reduce shipping cost per item; fewer returns can outperform a higher-priced product after refunds.
Use the pricing calculator for the arithmetic, then check product and collection contribution in ORVX. It reports returns and refund value, ad spend alongside revenue, and where a price experiment is worth running, but cannot estimate price elasticity or predict demand response.
A Pricing Review Routine
Once delivered orders reveal normal economics, review weekly and decide monthly. Use delivered-order revenue only, exclude cancellations and returns, and compare product, fulfilment, shipping, refunds and advertising on that set. Example: 40 delivered orders, S$1,200 revenue and S$480 contribution after advertising = S$12 per order; compare with your threshold, not the listed price. Separately reconcile GST collected, supplier invoices and tax records for the filing period: tax collected is not profit. Change price when repeat data shows contribution below target; change the cost model when supplier, shipping, payment or refund economics change; change offers when discounting reduces contribution without enough profitable orders; and check attribution when MER and attributed ROAS diverge before changing price. ORVX shows these measures from synced store data; its pricing calculator can assess a price experiment but cannot estimate elasticity or predict demand response.
- Weekly: check delivered-order contribution, refund value and return rate for exceptions.
- Monthly: decide whether to change price, costs, offer terms or channel assumptions, recording the reason and comparison period.
- Quarterly: review dead stock, remaining stock value and repeat behaviour before extending a discount or keeping a weak product live.
A workable Singapore price is not simply the product cost plus a markup. It is the customer-facing SGD amount that remains commercially viable after fulfilment, selling costs, acquisition, returns, and the correct GST treatment. Review contribution margin alongside conversion and order volume so each price change is judged by the profit it creates, not by the margin percentage alone.
Sources
- Current GST rates (Inland Revenue Authority of Singapore, checked 26 October 2026).
- Do I need to register for GST (Inland Revenue Authority of Singapore, checked 26 October 2026).
- GST on imported low-value goods (Inland Revenue Authority of Singapore, checked 26 October 2026).
How this page was made: drafted with AI from a brief, then checked by automated rules for arithmetic, sources and duplication. The sample numbers were calculated, not reported.