Pricing Calculator
Determine the optimal selling price for your product or service. Factor in costs, desired margin, competitor pricing, and discounts.
Pricing Strategy
How to Use This Tool
- Enter your total cost per unit, including materials, labor, and overhead allocated to the product.
- Enter the profit margin you want to earn on each sale, as a percentage of the selling price.
- Enter your expected monthly unit sales to see projected revenue and profit.
- Enter the average discount rate you typically give (sales, coupons, bulk deals) so the list price accounts for it.
- Review the list price, the effective price after discounts, and the resulting monthly and annual profit.
Formula & How It Works
Base Price (cost-plus)
Base Price = Unit Cost ÷ (1 − Desired Margin / 100)Solves for the price that leaves the desired percentage of the selling price as profit after covering unit cost.
List Price (adjusted for discounts)
List Price = Base Price ÷ (1 − Average Discount / 100)Grosses up the base price so that even after your typical discount is applied, you still hit your margin target.
Effective Price & Profit
Effective Price = List Price × (1 − Average Discount / 100); Profit per Unit = Effective Price − Unit CostThe actual price customers pay on average, and the real profit earned per unit after discounts.
Practical Examples & Common Use Cases
Handmade product with no discounts
Unit cost is $25, desired margin 40%, no discounts. Base Price = $25 ÷ 0.60 = $41.67. With 0% discount, list price equals effective price. Profit per unit = $16.67, and at 200 units/month that is $3,333 in monthly profit.
Retail product sold with regular promotions
Unit cost $25, desired margin 40%, average discount 10%. Base Price = $25 ÷ 0.60 = $41.67. List Price = $41.67 ÷ 0.90 = $46.30. Effective Price after the 10% discount = $41.67, giving a profit of $16.67/unit — matching the 40% target even after discounting.
Software add-on with heavy promotional discounting
Unit cost $10, desired margin 50%, average discount 20%. Base Price = $10 ÷ 0.50 = $20. List Price = $20 ÷ 0.80 = $25. Effective Price = $20, profit per unit = $10. At 500 units/month, monthly profit is $5,000 and annual profit is $60,000.
Frequently Asked Questions
Cost-plus pricing works for commodities. Value-based pricing works better for unique products. Competitive pricing matches the market. Most businesses use a blend of these approaches.
Yes. If you plan to run sales, offer bulk discounts, or give trade discounts, set your list price high enough to maintain margins after discounts.
Test and iterate. If sales are strong and margins are healthy, the price may be right — or possibly too low. If sales are slow, consider whether price, marketing, or product-market fit is the issue.
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