Cost-Plus Pricing Calculator
Price a product by adding a markup to its fully loaded unit cost — materials, labor and overhead — and see the resulting profit and margin.
How it works
Total cost = materials + labor + overhead · Price = total cost × (1 + markup%) · Margin % = (price − cost) ÷ price × 100
Cost-plus pricing builds a price from the fully loaded unit cost and adds a fixed percentage markup. Its strength is simplicity and guaranteed coverage of costs; its weakness is that it ignores what customers will actually pay and competitors charge. Note that the markup percentage always translates into a smaller margin percentage, since margin is measured against the larger selling price.
Worked example
With $30 materials, $20 labor and $10 overhead, the total cost is $60. A 40% markup gives 60 × 1.40 = $84, a $24 profit. Measured against the $84 price, that is a 28.6% margin — lower than the 40% markup.
Frequently asked questions
What is cost-plus pricing?
It sets the price by taking your total cost per unit and adding a fixed percentage markup. It guarantees each sale covers cost plus a set profit, which is why it is common in manufacturing, construction and government contracts.
Should overhead be included in the cost?
Yes, if you want the markup to represent true profit. Pricing only on materials and labor while ignoring allocated overhead (rent, utilities, admin) overstates your margin and can leave the business unprofitable at scale.
What are the drawbacks of cost-plus pricing?
It ignores demand, perceived value and competitor prices, so it can leave money on the table for premium products or overprice commodity ones. Many businesses use it as a floor and adjust toward value-based pricing.
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Educational estimate, not financial advice.