Know the Figures

Cost-Plus Pricing Calculator

Price from full unit cost, with overhead, fees and a target margin built in.

Replaces: Costing spreadsheets

How to use it

Enter your variable costs per unit, your fixed overheads for a period, the volume you expect to sell in it, a target margin or markup and any fee charged on the price. The calculator builds the full cost per unit, prices it, and shows how the answer moves if volume comes in higher or lower than planned.

Where the number comes from

  • Variable cost per unit is direct material + direct labour + other variable cost. Overhead per unit is fixed overheads ÷ expected units. Full cost is the two added together.
  • On a margin basis the price is full cost ÷ (1 − margin − fee rate), so that after the fee and the full cost the target share of the price is left as profit.
  • On a markup basis the price is full cost × (1 + markup), grossed up by ÷ (1 − fee rate) so the fee does not eat the markup.
  • Contribution per unit is price − fees − variable cost. Break-even units are fixed overheads ÷ contribution per unit.
  • The table recomputes overhead per unit and the cost-plus price at 50% to 150% of expected volume, and the period profit if you keep the price you set at your expected volume.

What goes wrong

The part most calculators leave out.

  • The overhead per unit is only right at the volume you entered. Sell fewer units and each carries more overhead, so a price set at the planned volume under-recovers it — the table shows by how much.
  • Raising the price to recover overhead when volume falls tends to cut volume further, which raises overhead per unit again. Cost-plus has no view of what customers will pay.
  • Fees charged on the price must be grossed up. Adding them to cost, or ignoring them, leaves the margin short by the fee on the fee or by the whole fee.
  • A margin and a markup of the same number give different prices. A target agreed as a margin but entered as a markup underprices every unit.
  • Overheads are spread evenly across units here. If products share overhead unequally, a single average rate overprices some and underprices others.

Pricing a unit with 40,000 of overhead at a 35% margin

Material of 18, labour of 12 and other variable cost of 3 make 33 of variable cost per unit. Spreading 40,000 of overhead across 5,000 units adds 8, for a full cost of 41. For a 35% margin on price, divide by 0.65: the price is 63.08, leaving 22.08 of profit per unit. Each unit contributes 30.08 towards overhead, so the price covers it from 1,330 units. Sell only 2,500 and overhead per unit doubles to 16: the price still covers it, but profit for the period falls from 110,385 to 35,192.

Questions

How do I calculate a cost-plus price?
Add up variable cost per unit and the share of overhead each unit carries, then divide by one minus the target margin (or multiply by one plus the markup). With a full cost of 41 and a 35% margin, the price is 41 ÷ 0.65 = 63.08.
Should cost-plus use margin or markup?
Either works if everyone knows which one is meant. The same number gives a higher price as a margin than as a markup: 35% margin on a 41 cost is 63.08, while a 35% markup is 55.35.
Why does the price change with volume?
Fixed overheads are spread over the units you expect to sell. Fewer units means more overhead on each, so the full cost — and the cost-plus price — rises.
How do I include card or marketplace fees?
Enter them as a percentage of price. Because the fee is charged on the whole price, including the part that covers the fee, it is divided out rather than added on.
Does anything I type get sent anywhere?
No. The whole calculation runs in your browser. Nothing is sent to us or logged, and there is no account to create. Your browser keeps the figures with this tab’s history so that Back and Reload bring them back, and Reset clears them.

Last updated .

Put this calculator on your site

Free to embed, on any site, commercial or not. No sign-up and no tracking script — the calculator runs in your reader’s browser exactly as it does here. All we ask is that you keep the credit line.

HTML

The small script resizes the frame as the reader changes inputs. Drop it if your CMS strips scripts — the calculator still works, it will just stay at a fixed height. The calculator is light by default; on a dark site, end the src with ?theme=dark, or ?theme=auto to follow each reader’s device.

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