Cost-plus pricing ensures every unit recovers its full cost and a target return. Enter variable cost, fixed costs and planned volume, then choose a target margin or markup to see the recommended price, profit at plan and break-even volume.
How it works
Set a cost-plus price that covers variable and allocated fixed costs at your planned volume, and see the resulting profit and break-even volume.
Full unit cost = Variable cost + Fixed costs ÷ Planned volume
Price (margin) = Full cost ÷ (1 − Target margin)
Price (markup) = Full cost × (1 + Markup)
Break-even volume = Fixed costs ÷ (Price − Variable cost)Common uses
- New product and service pricing
- Quotes, bids and proposals
- Annual price reviews
Worked example
The calculator above opens with this example. Change any input to see the results update instantly, or select Reset to return to these figures.
| Variable cost per unit | $38.50 |
| Fixed costs (period) | $180,000 |
| Planned volume (units) | 12,000 |
| Pricing basis | Target gross margin |
| Target percentage | 40% |
| Recommended price | $89.17 |
| Full cost per unit | $53.50 |
| Profit per unit | $35.67 |
| Total profit at plan | $428,000 |
| Revenue at plan | $1,070,000 |
| Break-even volume | 3,553 |
Cost-plus sets a floor; validate the price against competitor pricing and customer willingness to pay.
Interpreting the results
- If actual volume falls short of plan, fixed cost per unit rises and the realized margin shrinks.
- For special orders with spare capacity, price above variable cost can still add profit.
Frequently asked questions
What is cost-plus pricing?
Cost-plus pricing sets the price at full cost per unit — variable cost plus fixed cost allocated over planned volume — plus a target margin or markup. It is simple and ensures cost recovery at the planned volume.
What happens if actual volume is lower than planned?
Fixed cost per unit rises when volume falls, so the planned margin shrinks. Check the break-even volume to understand how much shortfall the price can absorb before the product loses money.
Should price be based only on cost?
Cost sets the floor, but the market sets the ceiling. Compare the cost-plus result with competitor pricing and customers’ willingness to pay before finalizing a price.
Related calculators
- Gross Margin & Markup Converter: Convert between cost, price, gross margin and markup.
- Break-Even Calculator: Break-even units and revenue, target-profit volume and margin of safety.
- Contribution Margin Calculator: Contribution-format income statement, CM ratio and operating leverage.
- Employee Cost & Billable Hourly Rate Calculator: Fully loaded employee cost per hour and the billable rate for a target margin.