Short answer
Calculate the cost of one usable finished unit, including materials, packaging, labor and allocated overhead. Then price = unit cost ÷ (1 − target margin). A $15 unit cost at a 30% target margin gives $21.43 when rounded to cents. Adding 30% to cost gives $19.50 and a 23.08% margin instead. These examples exclude selling fees and tax.
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Cost a usable unit
Start with the quantity that can actually be sold. If a batch uses $60 of materials but yields ten usable units, the material cost is $6 per unit. Waste, rejects and samples reduce usable yield even when the amount you purchased has not changed.
Include packaging and the time spent making each unit. Owner labor is a cost assumption too: twenty minutes at $18 per hour costs $6, because 20 ÷ 60 × 18 = 6. Keep making time distinct from monthly administration or other overhead you allocate separately.
| Illustrative cost per unit | Amount |
|---|---|
| Materials | $6.00 |
| Packaging | $1.00 |
| Labor: 20 minutes at $18/hour | $6.00 |
| Allocated overhead | $2.00 |
| Total unit cost | $15.00 |
Use one currency and a consistent unit basis. Avoid charging the same labor or packaging cost again through an overhead allocation.
Calculate margin from the selling price
Margin divides the difference between price and cost by the selling price. Rearranging that relationship gives a price for your chosen target:
Target price = unit cost ÷ (1 − target margin)
For a $15 cost and 30% margin, $15 ÷ 0.70 = $21.428571…, displayed as $21.43. This is a cost-based price to compare with your offer, not evidence that buyers will accept it.
The target must be below 100%. A 100% margin cannot be achieved with a positive unit cost. Negative target rates are outside this starter's intended inputs.
Do not substitute markup for margin
Markup divides the price increase by cost. Adding a 30% markup to $15 gives $15 × 1.30 = $19.50. Its margin is ($19.50 − $15) ÷ $19.50 = 23.08%, not 30%.
| Same $15 unit cost | Price | Margin |
|---|---|---|
| 30% target margin | $21.43 | about 30% |
| 30% markup | $19.50 | 23.08% |
Money displayed here is rounded to two decimal places. If a minimum margin is contractual, calculate it again using the exact price you intend to charge and round the quote appropriately.
Use the free pricing CSV
- Open the comma-separated CSV in Excel. Replace columns B–F with materials, packaging, labor minutes, hourly labor rate and overhead per usable unit. Enter nonnegative amounts in one currency.
- Enter
0.30in the target-margin and markup-rate columns for 30%; do not enter30. Format rate cells as percentages if you prefer that display. - Columns H–L contain formulas for unit cost, target price, markup price and the resulting markup margin. If they import as text, re-enter their leading equals signs.
- Check the $15, $21.43 and $19.50 example results before changing inputs. Copy the formula columns when adding a product row, then save an XLSX working copy.
- Resolve
CHECK MARGIN,CHECK COSTorCHECK PRICEinstead of treating them as a price. The simple checks do not validate every material unit or missing cost.
Add the costs this example leaves out
The starter excludes marketplace or payment fees, tax, delivery subsidies and returns. A percentage selling fee changes the price needed to preserve a margin; subtracting that fee only after setting the price can erase the margin you intended.
The Maker Cost & Pricing Calculator adds material records, usable yield, recipe/BOM lines, selling fees, break-even price and target price in a complete Excel workbook. Its companion CSVs are sample records, separate from the formulas in this independent free starter.
Keep a cost review connected to your lot inventory records so changes in material costs and usable yield are visible when you price the next batch.
Sources
- Microsoft — Calculate percentages — expressing rates as decimals and calculating a total from a proportion. The cost and margin examples here are Rerivo's illustrative calculations.
Example inputs are illustrative. Check your own costs, records and current provider terms. Last updated 2026-11-09.