Cost-Plus Pricing Calculator
(Selling Price From Cost and Markup)
Enter the direct cost and overhead for one unit and the markup you want to add. The calculator shows the selling price and the margin it gives.
Step 1 — Cost per Unit
Materials, direct labor — cost tied straight to making one unit
Rent, utilities, admin — allocated share of fixed costs per unit
Step 2 — Markup
Percentage added on top of total cost
Calculated Results
Enter your cost per unit and markup percentage to calculate the selling price.
This cost-plus pricing calculator sets a selling price by adding a markup to what a unit costs you. Enter the direct cost per unit, the overhead per unit and a markup percentage. It returns the selling price, the total cost, the markup as an amount, and the profit margin that markup gives on the price.
The Cost-Plus Pricing Formula
A product with $15 of materials and labor and $3 of overhead has a total cost of $18. A 40% markup adds 18 × 0.40 = $7.20, so the selling price is $25.20.
| Step | Calculation | Result |
|---|---|---|
| Total cost | $15 + $3 | $18.00 |
| Markup amount | $18 × 40% | $7.20 |
| Selling price | $18 + $7.20 | $25.20 |
| Profit margin | $7.20 ÷ $25.20 | 28.6% |
Markup Is Not Margin
The 40% added to cost is not 40% of the price. Measured against the $25.20 price, the $7.20 profit is a 28.6% margin. If the goal is a margin, convert it to a markup first.
| Target margin | Markup to enter | Price on an $18 cost |
|---|---|---|
| 20% | 25% | $22.50 |
| 30% | 42.86% | $25.71 |
| 40% | 66.67% | $30.00 |
| 50% | 100% | $36.00 |
A 100% markup, which doubles the cost, is known in retail as keystone pricing. The Markup vs Margin Calculator converts any other figure.
Working Out Overhead per Unit
Overhead is the part of the price that covers rent, utilities, admin and other fixed costs. To put it on a unit, divide the fixed costs for a period by the units you expect to sell.
$3,000 of fixed costs spread over 1,000 units is $3 a unit. That share is a forecast. If only 600 units sell, each one has to carry $5:
| Units sold | Overhead per unit | Total cost | Profit at $25.20 | Margin |
|---|---|---|---|---|
| 1,000 (planned) | $3.00 | $18.00 | $7.20 | 28.6% |
| 600 | $5.00 | $20.00 | $5.20 | 20.6% |
The price stayed the same and the profit on each unit fell by $2. Use a sales figure you are confident of. The Break-Even Point Calculator shows how many units cover the fixed costs at a given price.
Limits of Cost-Plus Pricing
- It ignores demand. Customers pay for what the product is worth to them. Your cost does not enter into it.
- It ignores competitors. A cost-plus price can land well above or below what similar products sell for.
- It rewards high costs. A fixed percentage on a higher cost gives a higher profit per unit, which removes a reason to cut costs.
Treat the result as a floor: the lowest price that covers costs and the profit you want. Then compare it with what the market charges before settling on a price.
How to Use the Cost-Plus Pricing Calculator
- Enter direct cost per unit: Type the materials and direct labor that go into one unit.
- Enter overhead per unit: Type the share of fixed costs carried by one unit: the fixed costs for a period divided by the units you expect to sell in it.
- Enter the markup: Type the percentage to add on top of total cost.
- Read the result: The calculator shows the selling price, total cost, the markup amount and the profit margin on the price.
Frequently Asked Questions
What is the cost-plus pricing formula?
Selling price = total cost per unit × (1 + markup). Total cost is direct cost plus overhead per unit. With a direct cost of $15, overhead of $3 and a 40% markup, the price is 18 × 1.40 = $25.20.
Is a 40% markup a 40% profit margin?
No. Markup is measured on cost and margin on price. A 40% markup on an $18 cost adds $7.20 for a price of $25.20, and 7.20 ÷ 25.20 is a 28.6% margin. A 40% margin needs a 66.67% markup.
How do I work out overhead per unit?
Divide the fixed costs for a period by the number of units you expect to sell in it. $3,000 of monthly rent, utilities and admin spread over 1,000 units is $3 a unit. The figure is only right if you sell that many.
What is keystone pricing?
Keystone pricing is a retail term for a 100% markup: the selling price is double the cost. It gives a 50% margin.
What are the disadvantages of cost-plus pricing?
It looks only at your own costs. It ignores what customers are willing to pay and what competitors charge, so the price can be too high to sell or lower than the market would accept. It also depends on a sales volume forecast for the overhead share.
When is cost-plus pricing a good fit?
When costs are known and steady, and when a price has to be justified from cost: contract manufacturing, construction, custom work and many wholesale and retail lines. It is also a quick way to find the lowest price worth accepting.
Formulas and worked examples checked in October 2026.