Here’s a hard truth many creators learn too late: amazing profit margins on paper can quickly evaporate in the real world. While that $30 selling price minus $10 production cost might look like a straightforward $20 profit, successful creators know to dig deeper.
Let’s talk about those sneaky costs that eat into your margins. Product photography isn’t just a one-time expense–you’ll need fresh shots for seasonal promotions, social media content, and whenever you update your packaging. Customer service can quickly become part-time, especially when you factor in time spent handling shipping questions, returns, and those inevitable “my package never arrived” emails.
Speaking of returns, plan for at least 2-3% of sales to end up as returns or replacements. Even the best products occasionally arrive damaged or don’t meet customer expectations. Smart creators build this cost into their pricing from day one. And if you’re holding inventory, don’t forget storage costs–whether you’re paying for warehouse space or just losing the use of your garage, there’s always a cost to storing products.
This is why successful creators stick to products with at least a 65% profit margin–it’s not greed; it’s math. This buffer gives you room for seasonal promotions, marketing experiments, and those unexpected costs that always seem to pop up. Think of it this way: if you can’t comfortably offer a 20% discount and still make money, your margins are too thin.
