Product Pricing Calculator

What cost-plus pricing actually does

Cost-plus pricing starts with what it costs to make or deliver your product, then adds a markup until you hit a target margin. The math looks like this:

With a $25 unit cost and a 60% margin target, you get $25 ÷ (1 − 0.60) = $62.50. That leaves $37.50 gross profit per unit, which is your 60% margin.

Three pricing mistakes that cost founders money

Confusing markup with margin. A 67% markup on a $10 product (priced at $16.70) is only a 40% margin. Markup uses cost as the base; margin uses revenue. The numbers look similar but produce very different outcomes when you start doing financial forecasting.

Forgetting variable costs. Unit cost needs to include everything that scales with each unit sold: materials, packaging, credit card fees (usually 2.9% + $0.30), shipping, and fulfillment labor. Leave any of these out and your profitability picture is wrong from the start.

Using cost as your only input. Cost-plus tells you the minimum price where you make money. It says nothing about what customers will actually pay. If someone would gladly pay twice your floor price, you've missed the chance to capture that value. Use this calculator to find your floor, then test how far above it you can go.

Other pricing approaches worth knowing

Value-based pricing ignores your costs and anchors to the outcome your product delivers. A tool that saves a business $10,000 a year can reasonably charge $2,000 a year, regardless of what it cost to build. Most SaaS companies price this way.

Competitive pricing looks at what others charge and picks a position relative to the field. If the market clusters around $49/month, pricing at $39 signals value and $59 signals premium. Neither works unless your product actually delivers on the positioning.

Penetration pricing starts intentionally low to build a customer base fast, then raises prices over time. It works in markets with high switching costs or strong network effects. The problem is that customers who signed up at $15/month often don't forgive the jump to $35/month.

How to read the sensitivity table

The table above shows your revenue and gross profit at seven price points, from 50% to 150% of whatever your recommended price calculates to. Three ways to use it:

• Find your actual floor by looking at which price points still leave you with an acceptable margin.
• Run a price test by raising your price 10% and watching whether demand drops. If it doesn't, you've found margin you were giving away.
• Plan promotions by checking which discount levels still keep you in the black. Most businesses can sustain 70–80% of recommended price for a short campaign; going below 50% rarely works unless you're clearing inventory.