Pricing Calculator
Price a product from its costs and target margin, with the break-even and the discount headroom.
Pricing is the fastest lever a business has: a one per cent price rise is worth more than a one per cent cost cut, and it arrives immediately. It is also the decision most often made by copying a competitor.
Enter the cost of the product, the costs of selling it and the margin you want, and this calculator gives the price, the profit per unit and the volume needed to cover your fixed costs.
At a glance
- What you enter
- Product cost per unit, Packaging and delivery per unit, Payment processing fee, Sales channel commission, Target profit margin, Fixed costs per month, Units you expect to sell per month, Price charged elsewhere (optional)
- What you get
- Selling price, Profit per unit, Profit per month, Profit per year, Units to cover fixed costs
- Formula shown
- Yes - every step, right below your results.
- Cost and privacy
- Free, no account needed, and nothing you type is stored.
See worked examples ↓ Read the FAQ ↓ Share this calculator ↓
Results are estimates for general information only - always verify with a professional or official source before acting on them.
How to use the Pricing Calculator
- 1 Enter Product cost per unit
- 2 Enter Packaging and delivery per unit
- 3 Enter Payment processing fee - A share of the selling price rather than a fixed cost.
- 4 Enter Sales channel commission - What a marketplace or retailer takes from each sale.
- 5 Enter Target profit margin
- 6 Enter Fixed costs per month
- 7 Enter Units you expect to sell per month (units)
- 8 Enter Price charged elsewhere (optional) - Enter 0 to skip the comparison.
- 9 Press Calculate. You get Selling price, Profit per unit, Profit per month, Profit per year, Units to cover fixed costs, and every intermediate step stays visible under “How is this calculated?”
- 10 Change one number at a time to see what moves the result - that is usually the most useful thing a calculator can tell you.
Worked examples
Real numbers run through this calculator. Open any example to load it into the form above and change it.
A $26 unit sold direct at a 60% margin
No marketplace commission, a 2.9% payment fee and $4,000 of monthly fixed costs.
You enter
- Product cost per unit
- $22.00
- Packaging and delivery per unit
- $4.00
- Payment processing fee
- 2.90%
- Sales channel commission
- 0%
- Target profit margin
- 60%
- Fixed costs per month
- $4,000.00
- Units you expect to sell per month
- 300 units
- Price charged elsewhere (optional)
- $0.00
You get
- Selling price
- $70.08
- Profit per unit
- $42.05
- Profit per month
- $8,614.56
- Profit per year
- $103,374.66
- Units to cover fixed costs
- 95
The selling price is $70.08 and the profit is $42.05 a unit, which is a 60.0% margin and a 169.5% mark-up on the $26.00 of product and delivery cost. The 2.9% payment fee takes $2.03 of the price, so the full unit cost is $28.03. Covering $4,000.00 of fixed costs needs 95 units a month, and 300 units produce $8,614.56 of profit a month, or $103,374.66 a year. Any discount deeper than 60.0% sells below cost.
An $11.50 unit sold through a marketplace
A 15% channel commission on top of a 2.5% payment fee, with $2,500 of monthly fixed costs.
You enter
- Product cost per unit
- $9.00
- Packaging and delivery per unit
- $2.50
- Payment processing fee
- 2.50%
- Sales channel commission
- 15%
- Target profit margin
- 50%
- Fixed costs per month
- $2,500.00
- Units you expect to sell per month
- 400 units
- Price charged elsewhere (optional)
- $24.00
You get
- Selling price
- $35.38
- Profit per unit
- $17.69
- Profit per month
- $4,576.92
- Profit per year
- $54,923.08
- Units to cover fixed costs
- 141
The commission and the payment fee together take $6.19 of the $35.38 price, so the full unit cost is $17.69 and the profit per unit is the same $17.69: a 50.0% margin and a 207.7% mark-up on cost. Break-even is 141 units a month against the 400 you expect, which gives $4,576.92 a month or $54,923.08 a year. The price is $11.38 above the $24.00 you entered for the price charged elsewhere, and the channel is the reason for the gap.
Guides that go with it
Pricing a trip before you book it
Flights are not the price of a holiday. How to build a trip budget that survives contact with the destination.
How Much of Your Salary Should Go to Rent?
You can work out a defensible rent ceiling in about fifteen minutes with nothing more than your payslip and a calculator. By the end of this guide you will know your gross and take-home pay, the rent…
How Much Does It Cost to Drive 100 Miles?
A hundred miles is a nice round trip to price out: one weekend outing, one leg of a longer journey, one week of commuting. By the end of this guide you will be able to work out your own cost for that…
Frequently asked questions
Why is the price divided by one minus the margin rather than multiplied by one plus it?
Because a margin is a share of the selling price and a mark-up is a share of the cost, and the two are different numbers. If a unit costs $26 and you want 60% of the price to be profit, you divide $26 by 0.4 rather than multiplying it by 1.6. The payment and commission percentages come out of the same divisor, which pushes the price higher again.
The result is that a 60% margin is a 169.5% mark-up on the product and delivery cost. Both figures are shown so you can use whichever one the person you are talking to is using.
How does a marketplace commission change the price?
It is taken from the selling price, so it has to be built into the price before the margin is calculated. Add a 15% channel commission to a 2.5% payment fee and the fixed part of the unit is only 32.5% of the price, so an $11.50 unit has to sell for $35.38 for a 50% margin to survive. The same product sold direct at a 50% margin would need a price of $24.21.
That difference is why the same product often cannot be sold at the same price on two channels. The commission is not a cost you can absorb at the margin, because it scales with the price you set.
What is the discount headroom?
It is the largest reduction that still leaves the price above the full unit cost, as a share of the price. In the first example it is exactly the target margin, because with no commission the profit is the margin. Add a 15% channel commission and the headroom falls to 50.0% of the price, and anything deeper sells below cost.
Headroom is not permission. A discount that removes the profit still leaves the fixed costs to be paid, and the number of units needed to cover them rises sharply as the contribution from each sale falls.
How is the volume needed to cover fixed costs worked out?
Fixed costs divided by the contribution each unit makes, which is the profit per unit when nothing else is charged per sale. In the first example $4,000 of monthly fixed costs on $42.05 a unit needs 95 units; in the second, $2,500 on $17.69 needs 141.
Those are break-even volumes, not targets, because at that number the month earns nothing at all. The monthly profit line shows what happens at the volume you actually expect, and the distance between the two is your room for error.