Cost-Plus Pricing Calculator (Markup & Margin)
Cost-plus pricing is the most direct way to set a price: take the unit cost and add a planned markup. The catch is that markup (a percentage of cost) and margin (a percentage of price) are easy to confuse, and getting them mixed up can quietly erode profit. This calculator takes your unit cost and target markup, then returns the selling price, the profit per unit, and the resulting gross margin so you can see exactly what your markup yields. Enter your own cost and markup figures.
Cost-plus pricing formula
Selling price = unit cost * (1 + markup)
Profit per unit = selling price - unit cost
Gross margin = profit per unit / selling price
Markup from margin = margin / (1 - margin)
Markup is applied to cost; margin is measured on price. The markup and margin in the formula are decimals. A markup always exceeds the equivalent margin because the bases differ.
Markup, margin, and pricing
- Markup is profit over cost; margin is profit over selling price.
- A 50 percent markup on cost equals about a 33.3 percent margin on price.
- Cost-plus guarantees each sale covers cost plus a planned profit.
- It ignores customer demand and competitor prices, so use it as a starting point.
- An accurate unit cost is essential or the resulting price will be wrong.
Cost-plus pricing: frequently asked questions
What is cost-plus pricing?
Cost-plus pricing sets the selling price by adding a fixed percentage markup to the unit cost. The markup is applied to cost, so a 50 percent markup on a $20 cost gives a $30 price. It is simple and ensures every sale covers cost plus a planned profit, but it ignores demand and competitor pricing.
What is the difference between markup and margin?
Markup is profit as a percentage of cost, while margin is profit as a percentage of the selling price. They are not the same: a 50 percent markup on cost equals a 33.3 percent margin on price. This calculator shows both so you do not confuse them.
What is the cost-plus pricing formula?
Selling price = unit cost * (1 + markup percentage). Profit per unit = selling price - unit cost. Gross margin percentage = profit per unit / selling price. The markup is expressed as a decimal inside the formula.
How do I convert a target margin into a markup?
If you know the margin you want on the price, markup = margin / (1 - margin). For example, a 40 percent target margin needs a markup of 0.40 / 0.60 = 66.7 percent on cost. Enter the markup in this calculator to reach that margin.
What are the drawbacks of cost-plus pricing?
It does not consider what customers are willing to pay or what competitors charge, so it can leave money on the table or price a product out of the market. It also depends on an accurate unit cost. Use it as a floor, then test against demand-based and competitive pricing.
Official sources
- U.S. Small Business Administration: Manage your finances.
- U.S. Small Business Administration: Calculate your startup costs.
Reviewed by the CalculatorHub team, edited by James Graham, 16 June 2026. See our methodology.