Product Pricing Calculator

Product pricing strategy determines profitability more than almost any other business decision. Price too low and you leave money on the table (or lose it). Price too high and you lose customers. This calculator helps you find the right price using two foundational methods.

Method 1 — Cost-Plus Pricing: Selling Price = Total Cost per Unit ÷ (1 − Desired Profit Margin) Or equivalently: Selling Price = Total Cost × (1 + Markup Percentage)

Note: Margin and markup are different:

• Markup = Profit ÷ Cost × 100 (calculated on cost)
• Margin = Profit ÷ Revenue × 100 (calculated on selling price) A 50% markup = a 33% margin. A 100% markup = a 50% margin.

Method 2 — Competitive / Value-Based Pricing: Anchor your price to competitor pricing or the perceived value to the customer — whichever is higher for a premium product, or lower for a budget offering.

Break-even analysis: Break-even Units = Fixed Costs ÷ (Selling Price − Variable Cost per Unit)

What each variable means:

• Fixed Costs: rent, salaries, insurance (don’t change with sales volume)
• Variable Cost: materials, shipping, payment processing (scale with each unit sold)
• Contribution Margin: selling price minus variable cost; each unit’s contribution to covering fixed costs

Worked example: Handmade candle business. Variable cost per candle: $4.50 (wax, wick, jar, label, shipping). Monthly fixed costs: $800 (website, tools, insurance). Target: sell 200 candles/month.

Cost-plus approach (50% margin): Selling price = $4.50 ÷ (1 − 0.50) = $9.00 Monthly profit = (200 × $9.00) − $4.50 × 200 − $800 = $1,800 − $900 − $800 = $100 (barely breaks even)

Better: 65% margin: Selling price = $4.50 ÷ (1 − 0.65) = $12.86 → round to $12.99 Monthly profit = (200 × $12.99) − $900 − $800 = $2,598 − $1,700 = $898/month

Break-even = $800 ÷ ($12.99 − $4.50) = 800 ÷ 8.49 = 95 units/month