Marketplace Pricing Strategy: How to Protect Your Margins on Amazon, Flipkart & Myntra

Most brands realise this too late: marketplace margins aren’t what they look like in the agreement.

At first, you calculate based on the commission percentage. Seems manageable. But what doesn’t show up clearly is everything else and this applies across platforms like Amazon, Myntra, Flipkart, and other major e-commerce marketplaces in India.

Hidden Costs That Hurt Profitability

Whether you’re an Amazon seller or onboarding on a new marketplace, here are the costs that sneak in:

• Return delivery fees that apply even when the product comes back. In fashion and apparel categories, you pay for both forward and return shipping for 15–35% of orders that might return unsold

• Platform convenience charges that apply again if the customer reorders

• Product handling or packaging deductions, which vary depending on your product’s weight, category, or fulfillment model (Amazon FBA vs Easy Ship, etc.)

• Storage fees and penalty charges, especially if your inventory isn’t moving fast enough

• Advertising costs, which are almost unavoidable now. Without running ads on platforms like Amazon or Myntra, your product may not even be discovered

ROAS Looks Worse Before It Gets Better

Even with a good product, strong repeat potential, and competitive pricing, you’ll need to invest in Amazon ads or marketplace performance campaigns to get visibility.

Your ROAS (Return on Ad Spend) might start off weak, especially in categories like fashion, home, and beauty. It may improve if your product earns solid reviews and repeat buyers, but by then, your margin might already be gone.

The Solution: Build Pricing Backwards

Most D2C brands calculate their price based on COGS and then "see what’s left."

What actually works is:

• COGS

• Plus all hidden marketplace costs

• Plus a marketing budget buffer

• Equals your true floor price

This method ensures you don’t bleed money on every sale once real orders start coming in.

Over 50% of the marketplace sellers I’ve worked with had to revise their MRP and Selling Price post-launch. This creates issues with your product ranking algorithm and confuses returning customers.

Think Long-Term Before You Launch

Before you list your product on Amazon, Myntra, Flipkart, or other platforms:

• Plan like you’ve already sold 1,000 units

• Account for real-world returns, penalties, and ad costs

• Set pricing based on full ecosystem costs, not just COGS

Launching on marketplaces isn’t just about uploading listings. It’s about setting up a sustainable e-commerce operation that protects your margins and scales profitably.

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About Faihai

Faihai is a modern marketing agency built for high-growth product and service brands. We specialize in two core verticals: Content Marketing and E-commerce Growth.

Our Content Marketing services include end-to-end content strategy, UGC-led storytelling, founder-led videos, vox pops, and high-performing reels across platforms like Instagram, YouTube, and LinkedIn. We help brands build authentic communities and drive organic reach through creative content.

Our E-commerce Growth services are designed to scale both marketplace and website (D2C) performance. From Amazon A+ content, listing optimization, and marketplace ads to Shopify CRO, Facebook Ads, Google Ads, and repeat purchase strategies, we work across the funnel to turn traffic into revenue.

If you're looking to grow your brand with real performance and content that connects, visit www.faihai.in