Determine selling price by summing direct materials, direct labor, overhead, and your target markup percentage.
Calculate your selling price by adding a standard markup to your total production cost with this free tool.
Cost-plus pricing is a simple method where you add a fixed markup percentage to the total cost of a product to arrive at the selling price. It is one of the most common pricing methods used in manufacturing, contracting, and retail.
If it costs you 500 rupees to produce something and you want a 40% markup, you charge 700 rupees. Cost-plus pricing guarantees you cover costs and earn a profit on every sale.
Selling price equals total cost multiplied by (1 plus the markup rate as a decimal). For a 40% markup on 500 rupees: 500 times 1.40 equals 700 rupees.
Total cost should include all direct costs (materials, labour) plus allocated overheads (rent, salaries, utilities) and any other costs associated with producing the item.
It is simple to understand and communicate. Every product is guaranteed to be profitable as long as your cost estimates are accurate. It is transparent: if a customer asks how you arrived at a price, you can explain your cost and markup clearly.
For government contracts, cost-plus pricing is often required by the client as it provides transparency and auditability.
Cost-plus pricing ignores what the market will bear. You might underprice if the market could support a higher price. You might overprice if competitors offer similar products at lower margins.
Always check your cost-plus price against market prices before finalizing. If your cost-plus price is too high to compete, you need to find ways to reduce costs.
Manufacturers, contractors, freelancers billing for time and materials, government suppliers, and small businesses that need a simple pricing methodology will benefit from this approach.
Many businesses start with cost-plus pricing and refine it over time as they gain market pricing knowledge.
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Common questions about Cost-Plus Pricing Calculator: Price Your Products Using the Cost-Plus Method on Tez Invoice.
Cost-plus pricing adds a fixed markup percentage to the total cost of a product to determine the selling price.
Selling price equals total cost times (1 plus markup as a decimal). For 40% on 500: 500 times 1.40 equals 700.
Yes. Free with no sign up.
Include all direct costs (materials, labour) and allocated overheads (rent, salaries, utilities) for a complete cost picture.
It depends on the industry and overhead structure. Common markups range from 20% to 200%.
Only if your cost estimates are accurate. Underestimating cost leads to lower profit than expected.
Yes. Fully responsive.
No. In-browser only.
Cost-plus adds a markup on cost. Margin-based pricing targets a specific percentage of the selling price as profit.
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