Free tool
Cost Price Calculator
Cost price is everything a product costs you before it is sold: its direct costs and its share of fixed costs. Add a target margin, and the tool gives you the selling price that keeps it.
Cost price is the total cost a business bears to produce, buy or sell a good or service: all the direct and indirect costs incurred until it is sold. Per unit, it is the unit’s variable costs plus its share of fixed costs, which is the period’s fixed costs divided by the units produced.
Your Price Is Set. What About Your Advertising?
The margin between your price and your cost price sets what your campaigns can pay for a sale. It is the starting point for your bidding targets.
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How cost price is calculated
Cost price = Variable costs per unit + Fixed costs ÷ Units Selling price excl. VAT = Cost price ÷ (1 − Target margin)
18 € of materials, 12 € of labour and 5 € of other costs make 35 € of variable costs. 40,000 € of fixed costs spread over 2,000 units add 20 €: the cost price is 55 €. For a 40 % margin on the selling price, the price excl. VAT is 91.67 €.
The share of fixed costs depends on volume. At 4,000 units it falls to 10 € and the cost price to 45 €; at 1,000 units it rises to 40 € and the cost price to 75 €. That is why a price set on a high volume turns against you when sales slow down.
For advertising, the useful number is the margin between your price and your cost price: it sets what a sale can cost in acquisition, and so the minimum ROAS of your campaigns.
What the calculation lets you set
- Your selling price, from the margin you want to keep.
- The effect of volume: the same unit costs less when you sell more of it.
Frequently asked questions
What is the formula for cost price?
Unit cost price = variable costs per unit + fixed costs ÷ units produced. With 35 € of variable costs and 40,000 € of fixed costs over 2,000 units: 35 + 20 = 55 €.
How do I calculate a selling price from cost price?
Divide the cost price by (1 − target margin). For 55 € and 40 %: 55 ÷ 0.60 = 91.67 € excl. VAT. The margin calculator does the reverse, from price to margin.
Should fixed costs be included in cost price?
Yes: cost price covers direct and indirect costs, fixed costs included. Without them you only get the variable cost, which overstates the margin of each sale.
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