Learn as you go · Free lesson
Understand your unit price & margin result
Start with the calculator above. Then follow the example below, one step at a time.
What this calculator does
A price can look profitable until you count the box, delivery, your time and the payment fee. This calculator brings those pieces together for one item or service and estimates a price for the margin you choose.
It also checks your current price. The suggested price is a model based on your inputs, not a market quote or a promise of sales. Keep the unit consistent: if the price is for one gift box, every cost should also be for that gift box.
How it works
Add materials, packaging, shipping you pay, labor time multiplied by your hourly pay allowance, and the fixed transaction fee. The labor allowance makes your time visible, even if it is not recorded as payroll.
A percentage fee grows with the selling price. That means you cannot simply add its percentage to the material cost. The formula leaves room in the final price for both the percentage fee and your chosen margin.
The remaining money is before fixed overhead and taxes unless you have already allocated a cost here. The target is your planning choice, not a recommended percentage. Percentage fees and target margin together must be below 100% for this model to produce a suggested price.
Suggested price = (materials + packaging + shipping + labor allowance + fixed fee) ÷ (1 − fee rate − target margin). Rates use decimals; the price rounds up to a cent.
Worked example
Example only. These are fictional business numbers, not recommended targets.
- Example: a fictional maker enters $15 materials, $2 packaging and $4 shipping paid by the business for one order.
- Half an hour at a chosen $25 hourly allowance adds $12.50 for time. A $0.30 fixed fee brings these costs to $33.80.
- The maker enters a 3% percentage fee and a 30% target margin. The part of price left for those costs is 1 − 0.03 − 0.30 = 0.67.
- Divide $33.80 by 0.67. The suggested price rounds up to $50.45. That meets the entered target within the model; it is not a reason to automatically lower a current price.
- At the example’s current $84 price, the 3% fee is $2.52. Total unit cost is $36.32 and the amount left is $47.68 before fixed overhead and taxes.
How to read your result
Compare your current price with the suggested price, then check whether all inputs are realistic. A price above the suggestion may leave a larger contribution, but only if customers buy and the costs are complete.
If a suggested price seems too high for the market, the result has identified a question rather than solved it. You could compare product size, delivery method or production time, one change at a time. Do not remove the value of your time just to make the number look lower.
Common mistakes
- Leaving preparation and packing time out of labor hours.
- Counting customer-paid shipping as a cost you absorb without checking.
- Using a guessed fee instead of your own provider’s terms.
- Treating the unit margin as final business profit after every monthly bill.
FAQ
Is the suggested price what I must charge?
No. It is the price that meets your chosen target under these assumptions. Demand, positioning and your full business costs still matter.
What does the hourly pay field mean?
It is a planning cost for the time spent on one unit. It does not determine payroll, personal take-home pay or whether that allowance is a tax deduction.
Does it handle several items in one transaction?
The fixed-fee input assumes one unit per transaction. If you sell bundles, define one bundle as the unit and enter matching costs.
Where do rent and insurance go?
This unit model is before fixed overhead. Use Break-even to check whether the contribution from enough units could cover those bills.
Why is there no suggested price?
The selected fee and margin may leave no share of price for costs. Check both percentages and read the warning rather than treating a missing result as zero.
Related calculators and guides
Educational estimates based on your inputs. Not financial, tax, or legal advice.