Cost Calculator AI
Business & StartupPrice Strategy

Product Pricing Calculator

Calculate profitable retail and wholesale selling prices by factoring in raw materials, direct assembly labor, allocated overhead, packaging, and target profit margins.

Unit Production Cost (COGS)

Pricing Strategy & Margin Goal

Product Cost & Margin Pricing Formula

COGS = Materials + Labor + Allocated Overhead + Packaging; Selling Price = COGS / (1 - Target Margin %) OR COGS × (1 + Markup %)
  • Cost of Goods Sold (COGS): Direct manufacturing expenditures required to produce one finished unit.
  • Target Margin: Price established so that gross profit represents an exact percentage of final selling price.

Step-by-Step Worked Example

Scenario: A manufactured consumer product with $30 COGS priced to achieve a 40% gross profit margin

Calculation Steps:

  1. Total Unit COGS = $15 + $10 + $3 + $2 = $30.00 / unit
  2. Recommended Selling Price = $30.00 / (1 - 0.40) = $50.00 / unit
  3. Unit Profit Amount = $50.00 - $30.00 = $20.00 / unit
  4. Effective Profit Margin = ($20.00 / $50.00) × 100 = 40.0%
  5. Effective Markup on Cost = ($20.00 / $30.00) × 100 = 66.7%
Result: Recommended selling price is $50.00/unit, generating $20.00 profit per unit (40.0% gross margin, 66.7% markup on cost).

How to Use This Calculator

  1. 1Enter all direct raw material, packaging, and assembly labor expenses per unit.
  2. 2Include allocated manufacturing overhead per unit.
  3. 3Select whether your target pricing is governed by profit margin or markup on cost.

Assumptions & Limitations

  • Prices reflect single-unit retail or wholesale pricing before bulk distributor discounts.
  • Target profit margin cannot equal or exceed 100%.

Frequently Asked Questions

What is the difference between markup and profit margin?

Markup is profit divided by cost, whereas profit margin is profit divided by selling price. A 50% markup on a $100 cost gives a $150 price, which yields a 33.3% profit margin.

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