Pricing Calculator builds a sustainable selling price from direct cost, variable selling fees, overhead allocation, target profit margin, customer discount, and sales tax. Use it to model product, service, wholesale, marketplace, and ecommerce pricing.
Enter pricing assumptions
Pricing formula
Recommended list price = Required net selling price ÷ (1 − Expected discount)
Customer price = Net selling price × (1 + Tax rate)
Profit per unit = Net selling price − Cost base − Variable fees
Symbols and terms
| Symbol | Meaning |
|---|---|
| C | Direct unit cost |
| O | Overhead allocated to one unit |
| F | Variable fee rate charged on sales |
| M | Target profit margin based on net sales |
| D | Expected customer discount |
| S | Net selling price before tax |
Worked example
A product has $40 of direct cost and $10 of overhead per unit. Selling fees are 8%, the target margin is 25%, and customers typically receive a 10% discount. The calculator first finds the after-discount price that covers cost, fees, and profit, then raises the list price enough to absorb the expected discount. This avoids the common mistake of adding percentages directly to cost when some expenses are percentages of revenue.
What to include in your cost base
Direct cost can include materials, inventory purchase price, direct labor, packaging, inbound freight, and production waste. Overhead allocation can include rent, software, insurance, salaries, equipment, utilities, marketing, and administration. Marketplace commissions, payment processing, royalties, and sales commissions usually belong in the variable fee rate.
Pricing strategy checks
- Compare the recommended price with customer willingness to pay and competitor positioning.
- Model promotions using the expected discount rather than assuming every sale occurs at list price.
- Test low-volume and high-volume scenarios because overhead per unit changes with sales volume.
- Separate sales tax or VAT from operating revenue.
- Recalculate when supplier, labor, freight, platform, or payment costs change.
- Use contribution margin to decide whether an additional order adds value.
Frequently asked questions
Why is this price higher than cost plus margin?
A target margin is a percentage of selling price, while markup is a percentage of cost. Percentage-based selling fees also consume part of revenue, so both must be solved within the price.
What if fees plus target margin reach 100%?
No finite selling price can satisfy the inputs. Reduce the fee rate or target margin.
Should shipping be included?
Include seller-paid shipping in unit cost or as a revenue-based fee. Exclude shipping paid separately by the customer if it exactly offsets the fulfillment charge.
Does this guarantee customers will buy?
No. Cost-based pricing establishes financial feasibility; market research, value, positioning, and demand determine whether the price is commercially realistic.
How often should prices be reviewed?
Review whenever major costs change and at regular intervals for inflation, competitive movement, conversion rates, refunds, and discounts.
How to use this Pricing Calculator
Enter direct cost, allocated overhead, variable fees, target margin, expected discount, tax, and sales volume in the Pricing Calculator. Select Calculate sustainable price to reveal results. Review the recommended list price and projected profit, then use PDF or Excel export. Reset restores the example.
Pricing Calculator decision guide
The Pricing Calculator solves for a sustainable selling price when fees and target profit are percentages of revenue. Use the Pricing Calculator to compare list price, discounted price, tax-inclusive customer price, realized margin, and total projected profit. The Pricing Calculator is especially useful for marketplace, ecommerce, wholesale, service, and product pricing scenarios.
Keep unit costs and allocated overhead consistent with the expected sales period. Run several Pricing Calculator scenarios because volume, discounts, commissions, and fulfillment costs can shift profitability. The U.S. Small Business Administration finance guide offers additional planning context. Revisit the Pricing Calculator whenever supplier costs, fees, or customer demand changes.
Related calculators
Educational estimate: Validate taxes, platform rules, accounting treatment, and customer demand before changing real prices.