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 and value-based pricing: Anchor to what competitors charge or to what the customer believes the thing is worth. For a premium product take whichever of those is higher, for a budget offering whichever is lower.
Cost-plus tells you the floor you must clear. It has nothing to say about the ceiling, and on anything with real differentiation the ceiling is where the money is.

Which numbers to fill in above: the calculator solves for whichever box you leave empty. Give it cost and margin and it returns the price. Give it cost and price and it returns the margin you are actually running. Give it margin and price and it tells you the cost you would have to hit.

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