How to price a product or service
Start with the direct material or ingredient cost. Add the value of your time, calculated from the minutes spent per unit and your chosen hourly rate. Then divide monthly fixed expenses by expected monthly sales to estimate the overhead allocated to each unit.
The calculator uses a profit margin formula: suggested price = unit cost ÷ (1 − target margin). For example, a 30% margin is different from adding a 30% markup. Your actual price may also depend on taxes, payment fees, demand, positioning, and competitor alternatives.
Suggested price = unit cost ÷ (1 − target margin)
What is the difference between profit margin and markup?
Margin is profit as a share of the selling price. Markup is profit as a share of cost. This tool calculates the selling price from a target margin.
How should I allocate fixed expenses?
Divide the monthly expenses you want to include by a realistic estimate of monthly units sold. Use a conservative sales estimate if you are unsure.
Does this include tax?
No. Tax rules vary by location and product. Check local requirements and add applicable taxes separately.