Calculate your optimal selling price by factoring in direct cost, allocated overhead, and your target profit margin.
This ensures your price covers not just the direct material cost, but a fair share of your fixed overhead too — a common mistake in pricing is forgetting to factor in rent, salaries, and other fixed costs when setting per-unit prices.
Estimate your total monthly overhead (rent, salaries, utilities, etc.) and divide it by your expected monthly sales volume to get an overhead cost per unit, then add this to your direct cost before applying your target margin.
Both matter. Cost-based pricing (like this calculator) ensures profitability, but you should also check that your resulting price is competitive and reflects the value customers perceive — a price that's profitable but far above market rate may not sell.
This varies by industry, but many small businesses target 30-50% gross margins as a starting point, adjusting based on competition, overhead intensity, and how price-sensitive their customers are.
No, this calculator computes your pre-tax selling price based on cost and margin. Add GST separately on top using our GST Calculator if you need to show customers a tax-inclusive price.
Setting a price that only covers direct cost is a common pitfall — you also need to recover your share of fixed overhead before any markup becomes real profit. This calculator builds in that overhead allocation so your final price reflects your true cost structure.
Once you've set your price, check it against your Break-even Calculator results to confirm your expected sales volume makes the business viable.
