Price products with VAT and margin in Egypt

Calculate cost, VAT, shipping, discounts, and margin before launching offers or campaigns.

Compliance and scale

Most new Egyptian merchants set a price by glancing at what a competitor charges, adding a round number on top of cost, and hoping the gap is profit. That guess almost always hides money you are quietly losing, because the shelf price a buyer sees has to absorb far more than the cost of the product itself: the 14 percent VAT the state expects, the courier fee to deliver across governorates, the cut a payment processor or cash-on-delivery handler takes, and only then whatever margin you actually keep. Skip any one of those layers and the discount you run next month can wipe out the profit you assumed was safe.

This lesson is the arithmetic, not the strategy of what to sell. We will build a single shelf price from the ground up in Egyptian pounds, stacking cost, VAT, shipping, fees, and a target margin in the right order, and then show how a "harmless" promo code eats into the thin slice at the top. It does not cover how to choose or validate which products deserve a place in your catalogue, and it does not explain your tax-registration or invoicing duties; both have their own lessons linked at the end. What you get here is a number you can defend.

The price stack: what a shelf price really contains

Think of your selling price as a stack of layers. Each one is real money that must be covered before the next is even possible, and the order matters because VAT in Egypt is calculated on the selling price, not on your cost.

  • Product cost (COGS). What the item actually costs you landed in your hands — supplier invoice plus import duty, inbound freight, and packaging. This is your floor; sell below it and every order loses money.
  • Operating overhead. A slice for the costs no single order pays directly: storage, your time, returns, marketing spend, and breakage. Many Egyptian sellers forget this and wonder why a "profitable" catalogue drains cash.
  • VAT at 14 percent. Egypt's standard VAT rate is 14 percent and it is charged on the sale, so it sits on top of your cost-plus-margin price, not inside it. If you are registered, the buyer pays it and you remit it; it is never your margin.
  • Shipping / courier fee. Whether you absorb it or charge it, the round-trip courier cost is real, and a refused cash-on-delivery parcel makes you pay it twice for zero revenue.
  • Payment and COD handling fees. Card gateways and cash-collection services skim a percentage; InstaPay and mobile-wallet transfers usually cost you far less than card or COD handling.
  • Target margin. What is left for you. Decide this as a deliberate percentage of the final price, not as an afterthought.

A worked example in EGP

Numbers make the stack concrete. Say an item costs you 200 EGP landed and you want a healthy margin.

  1. Start from cost. Product cost is 200 EGP. Add a realistic overhead allowance — say 30 EGP for storage, handling, and your share of returns. Your true cost base is now 230 EGP.
  2. Add your target margin. You want roughly 35 percent margin on the net price. Dividing 230 by 0.65 gives a net (pre-VAT) selling price of about 354 EGP, leaving you 124 EGP of gross margin.
  3. Apply 14 percent VAT. On 354 EGP the VAT is about 50 EGP, so the VAT-inclusive shelf price is roughly 404 EGP. Round to a clean 405 or 410 EGP for the storefront.
  4. Stress-test against fees. If a buyer pays cash on delivery and the collection fee plus courier on this route runs 45 EGP, and you absorb it, that comes straight out of your 124 EGP margin, leaving about 79 EGP. The order is still profitable — but now you can see exactly how much room you have.

The lesson of the example is that margin is what survives after every layer, and you cannot know whether a price is safe until you have walked the full stack at least once per product or product family.

How discounts erode the slice at the top

A discount does not come off the whole price — it comes off your margin, which is the thinnest layer. Run a 20 percent promo on the 405 EGP item and you give up about 81 EGP, but your cost, VAT base, and fees barely move. On a 124 EGP gross margin, that 81 EGP discount nearly erases your profit, and if the buyer also pays COD, the order can turn into a loss you delivered for free.

  • Calculate every promo against margin, not against revenue, before you publish it.
  • Free shipping is a discount — load its true governorate cost into the stack first, or restrict it to a basket size that still clears your floor.
  • During Ramadan and seasonal peaks, demand lets you protect margin with bundles and gifts-with-purchase instead of deep percentage cuts that competitors will match anyway.
  • Set a minimum sellable price per product so a campaign can never auto-discount you below cost-plus-VAT.

Build it once, then keep it current

Price is not set-and-forget in Egypt, where supplier costs, the pound, and courier rates all move. Revisit the stack whenever a supplier invoice changes, a courier raises rates, or you switch the payment mix toward cheaper InstaPay and wallet transfers. Keep your cost figure stored against each product in your Storix catalogue so margin is always visible, and review the full list before any major campaign so no SKU goes on sale below its real floor.

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