Business Tools

Free Product Pricing Calculator

The most comprehensive tool in this silo. Enter your material cost, labour (hours × rate), overhead per unit and target profit margin — the calculator combines everything into a suggested selling price with a visual cost breakdown.

1. Materials
2. Labour

Labour cost: $60.00

3. Overhead
4. Target margin

Results

Materials$25.00
Labour$60.00
Overhead$10.00
Total cost$95.00
Profit / unit$95.00
Suggested selling price$190.00

Cost breakdown

  • Materials13.2%
  • Labour31.6%
  • Overhead5.3%
  • Profit50.0%

What the Product Pricing Calculator does

Product pricing is the process of building a selling price from the ground up out of materials, labour and overhead, then adding a target margin on top — rather than starting from an existing price and checking it. It is the tool for makers and manufacturers who need to price a new item that has no existing selling price to reference.

Methodology and formula

Total Cost = Materials + (Labour Hours x Hourly Rate) + Overhead per Unit; Selling Price = Total Cost / (1 − Target Margin / 100).

Worked example

Inputs
Materials 18; labour 1.5 hrs at 20/hr; overhead 6/unit; target margin 45%.
Result
Total cost 54; selling price about 98.18; profit per unit about 44.18.

Dividing by (1 − 0.45) rather than multiplying by 1.45 is what guarantees the result is an exact 45% margin rather than a smaller markup-based figure — at $98.18 the seller genuinely keeps 45 cents of every dollar, not less.

When to use this tool

Use this tool when pricing a brand-new physical or handmade product with no existing price to check. Use the Break-Even Calculator once you have a price to work out the volume you need to sell, and the Markup Calculator for a faster cost-plus estimate when you don't need to itemise labour and overhead separately.

About the Product Pricing Calculator

How the price is built

Total Cost = Materials + (Labour Hours × Hourly Rate) + Overhead. Selling Price = Total Cost / (1 − Target Margin / 100). Dividing by (1 − margin) — not multiplying by (1 + margin) — is what produces the correct margin instead of a mis-scaled markup.

Don't skip overhead

Overhead per unit spreads your fixed costs (rent, tools, insurance, software) across your expected production. If you make 200 units a month and your fixed costs are $2,000, overhead per unit is $10. Skipping this step is why so many handmade sellers underprice themselves.

Labour is a real cost, even for founders

If you don't include your own labour at a realistic hourly rate, the 'profit' you're calculating is actually just your unpaid wage. Price the product as if you had to hire someone to make it — that's when the business starts working.

Frequently asked questions

What hourly rate should I use for my own labour?

The going market rate for the skill involved, not minimum wage. If you'd have to pay a contractor $30/hr to do this work, use $30/hr.

How do I estimate overhead per unit?

Total monthly fixed costs divided by expected monthly units. If unsure, use a conservative estimate of expected units — under-estimating overhead is the more common mistake.

What margin should I target?

Handmade / physical products: 40–60% is typical. Digital products: 70–90%. Wholesale/B2B: 30–50%. Start above your industry average — it's easier to discount than to raise price.

Related Pricing Tools

Other free tools in the pricing & profitability silo.

Profit Margin Calculator

Enter your cost and selling price to instantly see gross profit and profit margin percentage.

Open tool

Markup Calculator

Enter cost and desired markup % to see selling price and profit — with a side-by-side margin vs markup comparison.

Open tool

Break-Even Calculator

Find the units and revenue you need to cover your fixed costs. See a visual breakdown of costs vs revenue.

Open tool