How to Price Your Products in Pakistan Without Losing Money on Every Order

Ask a new seller in Pakistan how they set their price and you will usually hear some version of "I bought it for 800, so I sell it for 1,500." Then two months later they cannot work out why the bank account is empty even though orders are coming in every day.

The gap between those two things is everything that happens between your supplier and your customer's doorstep. Here is how to count it properly.

Start with landed cost, not supplier cost

Landed cost is what one unit costs you sitting in your room, ready to ship. That is more than the invoice from your supplier.

Say you buy kurtas from a wholesaler in Faisalabad at Rs 800 each, in lots of 50.

• Unit price: Rs 800

• Freight for the lot, Rs 3,000, split 50 ways: Rs 60

• Poly bag and tag per piece: Rs 25

• Damaged or unsellable pieces, say 2 out of 50, spread across the rest: Rs 33

Landed cost is Rs 918, not Rs 800. That 15 percent nobody counts is where a lot of margins go to die.

Then add the cost of delivering it

This is per order, and it is bigger than most people expect.

• Courier for a 1 kg intercity parcel: around Rs 250 to Rs 330 depending on your account and the courier

• COD service fee: another Rs 100 to Rs 200 per shipment

• Flyer bag, tape, invoice slip: Rs 30 to Rs 50

Call it Rs 420 on the low side. On a Rs 1,500 kurta, delivery is already eating 28 percent of the sale price before you have paid for the kurta itself.

Now the one everyone forgets: returned parcels

Cash on delivery is how most of Pakistan shops online, and it comes with a bill. The commonly quoted return to origin rate here sits somewhere around 18 to 20 percent, which means roughly one in five parcels comes back to you undelivered.

A returned parcel is not a neutral event. You paid to ship it out. You usually pay something to get it back. The product comes home slightly worse than it left, and the cash you were counting on never arrives.

The way to handle this in your pricing is to spread the cost of returns across the orders that do land. If your return rate is 20 percent, then for every 100 parcels you ship, only 80 pay you. So take your total delivery cost and divide by your delivery success rate.

Rs 420 divided by 0.8 comes to Rs 525 of real fulfilment cost per successful order.

Put it together

Same kurta, honest numbers:

• Landed cost: Rs 918

• Fulfilment, adjusted for returns: Rs 525

• Payment processing on prepaid orders, roughly 2 to 3 percent, so about Rs 40

• Platform cost: Rs 3,000 a month, which across 100 orders is Rs 30 per order

Total: Rs 1,513.

At a Rs 1,500 selling price, you are losing money on every single order. Selling more would only make it worse. This is not a rare situation, it is the single most common reason small stores quietly close after eight months.

So what should the price be?

Work backwards from the margin you need instead of forwards from what feels reasonable.

A workable rule for physical products in Pakistan: your selling price should leave you 30 to 40 percent gross margin after landed cost and fulfilment, because that margin is what pays for marketing, mistakes, and you.

For the kurta above, with Rs 1,513 of real cost, a price of Rs 2,200 leaves about Rs 690, which is 31 percent. That is a business. Rs 1,500 is a hobby with extra steps.

If Rs 2,200 feels impossible for what you are selling, that is useful information. It usually means one of three things: your supplier price is too high and you need to buy in bigger lots or find another one, your product is too commoditised to command a margin, or your parcel is heavier than it needs to be.

Five ways to fix the math without raising the price

Cut the return rate. This is the single highest leverage change available to you. Confirm every COD order with a WhatsApp message or a quick call before dispatch. Drop your unresponsive orders instead of shipping them hopefully. Going from a 20 percent return rate to 10 percent saves you around Rs 50 per order on the example above, without touching your price.

Push prepaid. Offer 5 to 10 percent off, or free delivery, for anyone who pays with JazzCash, Easypaisa or bank transfer. A prepaid order almost never comes back, and the discount costs you less than a return does.

Raise the average order value. Your fulfilment cost is per parcel, not per item. Two items in one parcel is nearly the same shipping cost as one. Bundles, "buy 2 get free delivery", and a small add on at checkout all work because they spread a fixed cost over more revenue.

Renegotiate courier rates once you have volume. The sheet rate is not the real rate. At 300 or 400 parcels a month you have something to negotiate with, and Rs 40 off per parcel is real money at that scale.

Weigh your parcels. Sellers routinely pay 2 kg rates on parcels that would be 1 kg with less packaging. Buy a cheap kitchen scale and check.

Do this once a quarter

Costs move. Your courier changes its rates, your supplier raises prices, the dollar does something, your return rate creeps up in a bad month. A price that worked in January can be underwater by June without anyone noticing.

Put a recurring reminder in your phone. Once every three months, open your order data, recalculate landed cost and real fulfilment cost per successful order, and check that your prices still clear it. Fifteen minutes of arithmetic, four times a year, is the cheapest business advice you will get.