Pricing Strategy (Cost-Plus & Margin)
Compute a selling price three ways from unit economics — cost-plus markup, target margin on price, and break-even — allocating fixed costs per unit by expected volume.
Data verified · July 2026
Why is the margin-based price different from the cost-plus price at the same percentage?
A markup percentage is applied to cost, while a margin percentage is applied to the selling price itself — a 25% margin on price requires a higher price than a 25% markup on the same cost, because the margin percentage is a share of a bigger number (the price, not the cost).
Source: Standard cost-plus / target-margin pricing methodology (management accounting) — price = full unit cost × (1 + markup %); price = full unit cost / (1 − target margin %). · updated 2026
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Everything about Pricing Strategy (Cost-Plus & Margin)
📋Overview+
This calculator builds a full unit cost from your variable unit cost plus fixed costs spread over expected sales volume, then prices it three ways: cost-plus (mark the full unit cost up by a percentage), target margin (solve for the price at which your desired margin ON PRICE is achieved), and break-even (the price that exactly recovers full unit cost with no profit or loss).
💡 Best practices
- Don't confuse a 25% markup with a 25% margin — they produce different prices, and mixing them up in a quote or contract can quietly erode profitability.
- If expected volume is uncertain, run the calculation at a conservative (lower) volume too — fixed costs spread over fewer units raise the full unit cost and the resulting price.
- Revisit the pricing whenever unit cost or volume assumptions move materially — a price set on stale cost assumptions understates true margin.
🔢 Concrete example
£30 unit cost, no fixed cost allocation, 25% markup: cost-plus price of £37.50, giving £7.50 profit per unit.
📖User guide+
How to use this calculator
- 1
Enter the variable unit cost and any fixed costs to allocate.
- 2
Enter the expected sales volume used to spread fixed costs per unit.
- 3
Enter a markup percentage to see the cost-plus price.
- 4
Enter a target margin percentage (on selling price) to see the margin-based price.
📚Glossary+
- Markup vs margin
- Markup is added on top of cost (e.g. 25% markup on £10 cost gives £12.50), while margin is expressed as a percentage of the selling price (a 25% margin on a £12.50 price implies £9.38 cost) — the two numbers differ for the same price.
- Full unit cost
- Variable cost per unit plus a share of fixed costs, calculated by dividing total fixed costs by the expected sales volume — the true cost baseline before any markup or margin is applied.
ℹ️Sources & updates+
Last data update
July 7, 2026
Sources and references
Standard cost-plus / target-margin pricing methodology (management accounting) — price = full unit cost × (1 + markup %); price = full unit cost / (1 − target margin %).
The data in this calculator is updated regularly to reflect the latest official rates. When in doubt, consult the official sources listed above.
FAQ — Pricing Strategy (Cost-Plus & Margin)
Why is the margin-based price different from the cost-plus price at the same percentage?+
A markup percentage is applied to cost, while a margin percentage is applied to the selling price itself — a 25% margin on price requires a higher price than a 25% markup on the same cost, because the margin percentage is a share of a bigger number (the price, not the cost).
What happens if I leave the target margin at zero?+
The calculator skips the margin-based price calculation and shows only the cost-plus and break-even prices — set a target margin percentage above zero to see the price needed to hit that margin.