My supplier increased prices. How do I know when to raise my retail price vs. absorb the cost?

Margin management question — supplier cost increases are a reality that beginners aren't prepared for

The decision depends on your current margin and price elasticity — how sensitive your buyers are to price changes at your specific price point.

Absorb the increase when: The increase is small ($0.50–$1.50), your current margins are healthy (65%+), and you're in a competitive market where a price increase would require new creative testing. The cost of testing a new price point (ad spend, potential CVR drop) sometimes exceeds the cost of absorbing a small COGS increase.
Raise the price when: The increase significantly damages your margin (below 55% gross), you have enough order data to know your product isn't highly price-sensitive, and you're at a price point where $5–10 extra is unlikely to trigger comparison shopping. Most operators underestimate how much they can raise prices.
The test method: If you're unsure, run a price test. Change your price to the higher amount and run for 7–10 days at equal spend. Compare CVR and ROAS at the new price vs. your historical baseline. If ROAS improves or stays flat — keep the higher price. If ROAS drops significantly — you've found your price ceiling.

Tactical FixFind a better supplier first. A 3-price-increase supplier in 2 weeks is a supplier relationship problem. Before changing your retail price, audit whether CJDropshipping or an agent can supply the same product at a stable COGS. Supplier switching often delivers more margin improvement than retail price increases.

See this in practice: Cash Flow Basics →