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Formula
How it works: Divide the cost by (1 - desired margin percentage) to get the selling price that achieves your target margin.
Worked Example
How to Price a Product
Pricing is one of the most critical business decisions. The right price covers your costs, generates profit, and reflects the value customers perceive. Cost-based pricing starts with your total cost and adds a desired margin. Value-based pricing sets the price based on what customers are willing to pay. Competitive pricing matches or undercuts competitors.
- Cost-plus pricing: Total Cost + (Total Cost x Desired Margin %) = Selling Price
- Always include both direct costs (materials, labor) and indirect costs (rent, utilities, marketing)
- Test pricing with A/B experiments before committing to a permanent price change
- Psychological pricing (e.g., $9.99 vs $10.00) can significantly impact purchase decisions
There is no single correct price for a product. The best price balances profitability, competitiveness, and customer value perception.
You can also calculate changes using our Profit Margin Calculator, Markup Calculator or Break-Even Calculator.
Frequently Asked Questions
How do I price my product?
Start with your cost, add your desired margin, and validate against market prices and competitor analysis.
Should I price based on margin or markup?
Margin is more commonly used in finance and is easier to compare across products.
What is cost-plus pricing?
A strategy where you add a fixed markup percentage to the cost to determine the selling price.
Can I embed this Pricing Calculator on my website?
Yes. Click the "Embed" button at the top of this page to customize the size, colors, and theme, then copy the iframe code. Paste it into any HTML page, WordPress site, or CMS. It is completely free, requires no signup, and works on all devices. You can also visit our embed guide at calculory.com/services/embed-calculators for more details.
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