Free calculator
Free pricing calculator
Cost-plus pricing is a floor, not a strategy. Enter what one sale costs you and the margin you need; this shows the minimum price that hits your target, how much markup that implies, and where it sits against a competitor.
Set a price from cost and target margin
Everything that scales with one sale
Optional reference point = Rs. 2.5k
- Price for 60% margin
- Rs. 2,250.00
- Markup on cost
- 150%
- Versus competitor price
- -10.0%
How the formula works
Price = unit cost divided by (1 minus target margin). A 60 percent margin means cost is 40 percent of price, so price is cost divided by 0.4. Markup is margin expressed against cost instead of revenue: the same 60 percent margin is a 150 percent markup.
Worked example
A handmade bag costs Rs. 900 all-in. For a 60 percent gross margin you must charge Rs. 2,250. If the closest competitor sells at Rs. 2,500 you are 10 percent cheaper while keeping your target margin, which is a defensible position.
Common mistakes
- Forgetting hidden variable costs: payment fees, packaging, returns.
- Confusing markup with margin; a 50 percent markup is only a 33 percent margin.
- Setting price purely from cost when customers would pay more for value.
- Ignoring fixed-cost recovery; margin per unit must also cover overheads at realistic volume.
Frequently asked questions
What margin should I target?
Enough to cover fixed costs at realistic volume plus profit. Work backwards from break-even: required margin depends on how many units you can actually sell.
Is underpricing competitors always bad?
Not if it is deliberate positioning with a cost structure that supports it. Accidental underpricing is the dangerous kind.
How do discounts affect this?
Every discount comes straight out of contribution. A 20 percent discount on a 60 percent margin product removes a third of its profit.
Related tools
Results are arithmetic on the numbers you enter, not predictions. Validate important figures with an accountant before making financial commitments.