The working behind the answer
How to use this calculator
Build the cost of one finished item. Enter labour as decimal hours and allocate overhead to one item rather than entering the whole monthly amount. The target is a margin on selling price, which differs from a markup on cost.
The formula
Build a product price
Unit cost = materials + labour hours × labour rate + packaging + overhead; price = cost ÷ (1 − margin ÷ 100)
A worked example
Materials cost £10, half an hour of labour at £20 adds £10, packaging adds £2 and overhead adds £3. The £25 total cost needs a selling price of about £41.67 for a 40% target margin.
Good to know
The result includes only entered costs and a target margin. Taxes, shipping and transaction fees are not added automatically. Avoid counting labour or overhead twice. A rounded selling price may slightly change the realised margin.
Common questions
Where can I work out overhead per item?
Use the overhead allocation calculator with total overhead and the relevant production volume.
Is labour cost the same as my selling hourly rate?
Not necessarily. Enter the labour cost or allowance you want this product costing model to include.