How to Price for Profit (Not Just Revenue)

I've talked to creators who are doing what looks like a healthy revenue number but are barely profitable. They're excited about the sales volume, but when you run the actual math — platform fees, tool subscriptions, time cost, ad spend — the margins are thin or even negative on some products.

The goal isn't revenue. The goal is profit. And pricing for profit requires thinking differently than most new creators do.

Revenue vs. Profit: A Quick Reset

Revenue is the total amount that comes in from sales. Profit is what's left after all costs are paid.

For digital products, the costs most creators track are obvious ones: platform fees, maybe some paid promotion. But the full cost picture includes:

• Platform fees: What percentage does your selling platform take on each transaction?
• Tool subscriptions: Email marketing platform, design tools, AI writing subscriptions, analytics tools. Divide your monthly total by the number of products you sell — each product is carrying a portion of those costs.
• Creation time: Your hours have value. If you spent 20 hours creating a product and sold it once for $10, you made $0.50 an hour before any other costs.
• Customer support time: Refunds, questions, troubleshooting — this is time with a real cost.
• Promotion costs: If you run ads or pay for any distribution, those are direct costs.

When I started being honest about the full cost picture, some of my lower-priced products looked very different. The ones I thought were profitable had thin margins once I counted everything.

Why Digital Products Can Have Excellent Margins (If Priced Right)

Here's the good news: digital products have structural advantages for profitability. You create once and sell many times with zero incremental production cost. No manufacturing, no inventory, no shipping.

But you can still undermine those advantages by pricing too low or choosing a platform with high fees.

Platform fees matter more than most creators realize. A platform that takes 10% per sale versus one that takes 3% might seem like a small difference, but at meaningful volume, it's a significant chunk of your profit. This is one reason I use MadeThis — the fee structure supports healthy margins, especially as sales volume grows.

The zero marginal cost nature of digital products means pricing can be more aggressive on the high end. You're not trying to cover the cost of producing the next unit — you're amortizing the fixed cost of creating it once across all future sales. The higher the price, the faster you recoup the creation cost.

The Real Cost Calculation

Before you set a price, do this calculation:

1. Creation cost: Estimate your hours × your effective hourly rate. Be honest.
2. Tool allocation: What portion of your monthly tool spend does this product carry?
3. Platform fee: At your target price, what does the platform take per sale?
4. Break-even volume: At your target price minus costs, how many sales to break even on creation cost?
5. Ongoing margin: After break-even, what's the profit per sale?

Most creators skip step 1 entirely. They think "I didn't pay anyone to make this, so the creation cost is zero." That's how you end up with thin margins even when sales look good.

If a product would take you 15 hours to create and you value your time at even a modest rate, that's a real cost baked into the product that the pricing needs to recover.

The Underpricing Trap

New creators systematically underprice. In my experience, the reasons are psychological: fear of rejection, impostor syndrome, comparison with the cheapest options in the market, and the mistaken belief that lower prices mean more sales.

Lower prices do not always mean more sales. In many markets, they mean fewer sales, because buyers use price as a signal of quality. A $9 template and a $49 template may convert at similar rates — and the $49 template has over 5x the margin per sale.

I covered this more in how to price your digital products for maximum sales, but the short version: test higher prices than feel comfortable. You'll often be surprised.

The right question isn't "what's the lowest price someone will pay?" It's "what's the price that maximizes profit?"

Pricing Tiers and Product Suites

One underutilized strategy for improving margins: offer a product suite instead of a single product.

If your core product sells for $29, consider whether there's a $79 version with more content or support, and a $19 entry-level version that introduces buyers to your work. The middle product often sells better than the entry-level one — buyers want the "real" version, and the pricing makes it feel accessible compared to the premium.

On MadeThis, you can list multiple products and create upgrade paths easily. The buyers who upgrade from a $19 product to the $79 one in their first month are your most valuable customers — their total spend is much higher, and they found you through a low-friction entry point.

Review Your Pricing Annually

Markets change. Your audience's willingness to pay changes. Your costs change. What was the right price a year ago may not be the right price today.

I review pricing on my core products once a year. I look at conversion rates, refund rates, and feedback. Sometimes I raise prices. Sometimes I adjust the product to justify a higher price. I've never had revenue drop from a modest price increase on a product that was already selling well.

The goal is sustainable profitability — not just revenue that feels good in the moment. Price accordingly.

Start With the Math

The next time you're launching a product, do the actual calculation before you set the price. Write down every cost. Decide on a target margin. Work backward to the price.

Then check your gut reaction. If the calculated price feels uncomfortably high, that's often a signal that you're about to underprice out of fear rather than logic.

Price for profit. Everything else follows.