- Most sellers price by looking at competitors — but that tells you nothing about whether YOU will be profitable at that price
- The backward pricing formula starts from your target profit margin and calculates the minimum price you can charge
- UK sellers need to price ~3% higher than US sellers for the same margin because of the 9% total platform fee vs 6%
- If your minimum viable price is higher than what the market will pay, the product isn't worth selling — kill it before it kills your margin
TikTok Shop pricing strategy determines whether you make money or lose it — and most sellers get it backwards. They look at what competitors charge, pick a similar price, and hope the math works out. It usually doesn't.
The problem is simple: your competitor's price is based on their COGS, their supplier deal, their commission structure, and their profit margin target. None of those numbers are the same as yours. Copying their price means gambling that your cost structure happens to be similar. On TikTok Shop, where platform fees eat 6–9% of every sale before you even count product costs, that gamble fails more often than it succeeds.
This guide shows you how to price products the right way: start from the profit you want to keep, and work backwards to the minimum price you can charge. Use our free TikTok Shop profit calculator to test your numbers instantly.
Why Most TikTok Sellers Price Products Wrong
The typical pricing strategy on TikTok Shop goes like this:
- Find a similar product on the platform
- Check its price (say, £24.99)
- Price yours at £22.99 to undercut
- Hope you make money
The problem? That £22.99 might be profitable for a seller with £3 COGS and no affiliate programme. But if your COGS is £6 and you're paying creators 15% commission, that same price leaves you with negative net profit on every order.
Undercutting without knowing your own numbers is the fastest way to scale losses. And on TikTok Shop, where 42% of purchases are under $50, the margins on low-ticket items are already razor-thin. Every pound you shave off the price comes directly from your profit margin.
The fix isn't to price higher blindly — it's to know exactly what your minimum viable price is before you list anything.
The Backward Pricing Formula
Instead of starting with the market price and hoping you're profitable, start with the profit you want and calculate the price you need.
The formula:
Minimum Price = COGS ÷ (1 − Fees% − Commission% − Ad Cost% − Target Margin%)
This tells you the lowest price at which you can sell a product and still hit your profit margin target after every cost.
UK Example — Beauty Product
Let's say you sell a skincare serum on TikTok Shop UK:
- COGS (landed cost): £4.30
- Platform fees: 9% (referral fee, all-in — payment processing is bundled)
- Affiliate commission: 10%
- Ad spend allocation: 5% of revenue
- Target net profit: 20%
Minimum Price = £4.30 ÷ (1 − 0.09 − 0.10 − 0.05 − 0.20)
Minimum Price = £4.30 ÷ 0.56
Minimum Price = £7.68
Your minimum viable price is £7.68. Anything below that and you're losing money. If the market price for similar serums is £14.99, you have comfortable margin. If competitors are selling at £7.99, this product doesn't work for you at your cost structure — no matter how well it sells.
US Example — Same Product
Same COGS ($5.00 equivalent), but with the US unified 6% fee:
Minimum Price = $5.00 ÷ (1 − 0.06 − 0.10 − 0.05 − 0.20)
Minimum Price = $5.00 ÷ 0.59
Minimum Price = $8.47
The US seller's minimum price is $8.47 — lower than the UK seller's equivalent because the platform fee is 6% instead of 9%. This is why a pricing strategy that works in the US doesn't automatically work in the UK. The fee gap is structural.
For a full breakdown of every fee in both markets, see our 2026 TikTok Shop fees guide.
Minimum Viable Price by Category
Here's what the backward formula produces for common TikTok Shop categories, assuming a 20% target margin and 10% affiliate commission:
| Category | Typical COGS | UK Min Price (9% fee) | US Min Price (6% fee) | Market Price Range |
|---|---|---|---|---|
| Beauty & Skincare | £3–5 | £5.36–8.93 | £5.08–8.47 | £12–30 |
| Health & Supplements | £4–8 | £7.14–14.29 | £6.78–13.56 | £15–40 |
| Fashion Accessories | £2–6 | £3.57–10.71 | £3.39–10.17 | £8–25 |
| Phone Accessories | £1–3 | £1.79–5.36 | £1.69–5.08 | £5–15 |
| Kitchen Gadgets | £3–7 | £5.36–12.50 | £5.08–11.86 | £10–30 |
| Electronics | £10–25 | £17.86–44.64 | £16.95–42.37 | £20–60 |
The insight: Beauty and health products have the widest gap between minimum price and market price — which is why they're the most profitable categories on TikTok Shop. Electronics has the narrowest gap, making it the riskiest category for sellers with tight margins.
For detailed margin benchmarks by category, see our TikTok Shop profit margin guide.
Pricing for Affiliate-Driven vs Organic Sales
Your pricing strategy should account for how you acquire customers. Affiliate-driven sales and organic sales have completely different cost structures.
Organic sales (your own content, no affiliate, no ads):
Minimum Price = COGS ÷ (1 − Fees% − Target Margin%)
With no commission and no ad spend, your minimum price drops significantly. A £4.30 COGS product on UK TikTok Shop with a 20% target margin:
£4.30 ÷ (1 − 0.12 − 0.20) = £4.30 ÷ 0.68 = £6.32
Affiliate-driven sales (10–20% commission):
£4.30 ÷ (1 − 0.12 − 0.15 − 0.20) = £4.30 ÷ 0.56 = £8.11
The difference is £1.79 per unit — nearly 30% higher. This means your pricing needs to be high enough to sustain affiliate sales, even if most of your volume comes from organic content. If you set your price based on organic-only economics and then turn on affiliates, you'll bleed money on every creator-driven sale.
To understand what commission rate you can actually afford based on your COGS, see our COGS guide for TikTok Shop sellers.
When Your Minimum Price Is Too High
Sometimes the backward formula gives you a number that's higher than what the market will pay. This is critical information — it means one of three things:
Your COGS is too high. Renegotiate with your supplier, order larger quantities, or find a cheaper source. Every £1 reduction in COGS drops your minimum price by roughly £1.90 (because of the fee multiplier effect). This is the highest-leverage fix.
Your commission is too generous. If you're offering 20% to affiliates, test 10–12%. Some creators perform equally well at lower rates. The difference between 10% and 20% commission on a £20 product is £2 per order — that's the difference between profitable and unprofitable for many sellers.
The product doesn't work on TikTok Shop. Not every product is viable. If your minimum viable price is £25 and the market price is £18, no amount of optimisation will make it work. Cut the product, redirect your budget to winners, and move on — our 30-day fix-or-cut framework walks through that call. This decision is easier when you see the numbers clearly.
For a framework on when to cut a product, track your per-SKU margins. If a product has been under 10% net profit for 30+ days, it's a candidate for removal.
Price Testing: Finding the Sweet Spot
Your minimum price is the floor. The market price is the ceiling. The sweet spot is somewhere in between — and TikTok's discovery-based platform gives you room to test.
Why TikTok Shop pricing is different from Amazon: On Amazon, buyers compare prices side by side. A £1 difference can cost you the Buy Box. On TikTok, buyers discover products through content — they're watching a video, not running a price comparison. This means TikTok shoppers are less price-sensitive than Amazon shoppers, especially for products that demo well in video.
How to test: Start at the higher end of your range (closer to the market price, well above your minimum). Run for 2 weeks. Check your conversion rate and profit margin. If conversions are healthy, keep the price — you're maximising profit per order. If conversions are low, drop by 10% and test again.
The rule: Never price below your minimum viable price, even to "test the market." Every sale below your floor is a sale that loses money.
Model Your Price Before You List
The pricing strategy that works isn't about finding the perfect number once — it's about knowing your floor, testing your ceiling, and tracking your net profit as costs change. Supplier prices move, platform fees update (the UK went from 5% to 9% in 2025), and ad costs rise as more sellers enter the market.
Start by modelling your pricing: plug your COGS, fees, and commission into our profit calculator to see your real margin at different price points. Run the backward formula before you list any product.
If you're already selling, Margn shows your actual net profit per product from real order data — so you can see immediately which products are priced right and which ones are losing money with every sale.
- Free plan: 500 orders/month, full COGS management
- Pro plan (€19/mo): Unlimited orders, 15-min sync, ad spend & ROAS tracking
For a step-by-step guide to calculating your complete profit formula, see our guide to calculating TikTok Shop profit.
Not sure which tracking tool fits your needs? See our comparison of TikTok Shop profit trackers.
Ready to see if your prices actually work? Get started free — no credit card required.
