Short answer
Price a product in three steps: unit cost = materials + labour + packaging + monthly overhead / units sold; wholesale price = unit cost / (1 - your margin); retail price = wholesale / (1 - the retailer's margin). A $12.25 unit cost at a 40% margin is $20.42 wholesale and, at a 50% retailer margin, $40.83 retail.
- Unit cost = materials + labour minutes x hourly labour cost / 60 + packaging + monthly overhead / units sold.
- Wholesale = cost / (1 - your margin). Retail = wholesale / (1 - retailer's margin). $12.25 becomes $20.42, then $40.83.
- Overhead per unit falls with volume: $6.00 at 100 units a month, $0.75 at 800, on $600 of overhead.
- Maximum unit cost = retail ceiling x (1 - retailer's margin) x (1 - your margin): $9.00 for a $30 shelf price.
- Cost x 1.40 gives $17.15 and keeps 28.57%, not 40%.
On this page
- Product pricing formula: unit cost, wholesale price, retail price
- Product pricing calculator: cost per unit, wholesale and retail
- How to work out cost per unit from a batch
- Overhead per unit: divide monthly overhead by units sold
- How to calculate wholesale price and retail price together
- Working back from a retail price ceiling to a maximum unit cost
- Pricing goods you buy and resell: landed cost
- The common mistake: adding your margin as a markup
- Product pricing calculator in Excel and Google Sheets
- Calculator, your own price sheet, or a P&L template: which to use
- Step-by-step
- FAQ
Product pricing formula: unit cost, wholesale price, retail price
Price a product in three lines. Unit cost = materials + labour + packaging + overhead per unit. Wholesale price = unit cost / (1 - your margin). Retail price = wholesale price / (1 - the retailer's margin).
Take a candle with $4 of materials, 15 minutes of labour at $24 an hour ($6.00), $0.75 of packaging and $1.50 of overhead. Unit cost is $12.25. At a 40% margin the wholesale price is $12.25 / 0.60 = $20.42. A shop that wants a 50% margin sells it at $20.42 / 0.50 = $40.83.
I build pricing arithmetic; I do not make or sell candles. Every input on this page is an assumption to replace with your own number, and nothing here says what a product in your market sells for.
Product pricing calculator: cost per unit, wholesale and retail
Enter the nine inputs per unit and per month. The calculator returns total cost per unit, the wholesale price, the retail price, the retail price as a multiple of cost, and the profit per unit sold wholesale and sold direct.
It opens on the candle example: $12.25 cost, $20.42 wholesale, $40.83 retail. Three fields need a note:
- Your margin at wholesale % is the share of the wholesale price you keep after the full unit cost. It is a margin, not a markup.
- Retailer margin % is the share of the shelf price the shop keeps. Type 0 if no shop stands between you and the buyer; wholesale and retail are then the same price.
- Selling fees % applies only to units you sell yourself at the retail price. I do not quote any platform's fees: read your own card, marketplace or stall fee schedule and type the total.
How to work out cost per unit from a batch
Cost the batch, then divide by the units you can sell. Materials per unit = batch materials / sellable units. Labour minutes per unit = timed batch minutes / sellable units.
The candle figures come from one assumed batch: $96 of wax, wicks, fragrance and jars makes 24 candles, so materials are $4 each. The batch is timed at 6 hours from melting to labelled and boxed, clean-up included: 360 minutes / 24 = 15 minutes each.
Worked example: One candle from a batch of 24: cost per unit, wholesale and retail price (all inputs are assumptions)
| Item | Value |
|---|---|
| Materials (input) | $4.00 |
| Labour minutes per unit (input) | 15 |
| Labour cost per hour (input) | $24.00 |
| Packaging per unit (input) | $0.75 |
| Overhead a month (input) | $600.00 |
| Units sold a month (input) | 400 |
| Target margin % (input) | 40% |
| Retailer's margin % (input) | 50% |
| Selling fees % of the retail price (input) | 10% |
| Labour per unit | $6.00 |
| Overhead per unit | $1.50 |
| Total cost per unit | $12.25 |
| Wholesale price | $20.42 |
| Profit per unit at wholesale | $8.17 |
| Retail price | $40.83 |
| Retail price as a multiple of unit cost | 3.33 |
| Selling fees per unit sold direct | $4.08 |
| Profit per unit sold direct at retail | $24.50 |
| Margin kept selling direct at retail | 60% |
| Price if you MARK UP instead | $17.15 |
| Margin you actually keep with markup | 28.57% |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
Divide by sellable units, not units poured. If 2 of the 24 are rejects, 22 carry the whole batch: materials become $4.36 and labour 16.36 minutes a unit. Unit cost rises by $0.90 to $13.15 and the retail price to $43.85.
Price your own time. The labour rate is what an hour of making costs, whether you pay an employee or do it yourself. Tax cost of goods sold treats this differently: the Schedule C line shown in IRS Publication 334 reads "Cost of labor. Do not include any amounts paid to yourself". Price with your hours in anyway, or the price only works while you work unpaid. If you are self-employed, the IRS gives the self-employment tax rate as 15.3% (12.4% social security plus 2.9% Medicare). Ask a tax professional how either rule applies to you.
Jar or shipping box? The same IRS chapter treats containers that are an integral part of the product as cost of goods sold, and other packages as shipping or selling expenses. Here the jar is in materials and the $0.75 is the box. Both belong in the price.
Overhead per unit: divide monthly overhead by units sold
Overhead per unit = monthly overhead / units sold in a month. It is a division, not a percentage, so the same product costs more to make in a slow month. With $600 of rent, insurance, software and tools and 400 units sold, each unit carries $1.50.
| Units sold a month | Making hours a month | Overhead per unit | Total cost per unit | Wholesale price | Retail price |
|---|---|---|---|---|---|
| 100 | 25 | $6.00 | $16.75 | $27.92 | $55.83 |
| 200 | 50 | $3.00 | $13.75 | $22.92 | $45.83 |
| 400 | 100 | $1.50 | $12.25 | $20.42 | $40.83 |
| 800 | 200 | $0.75 | $11.50 | $19.17 | $38.33 |
At 100 units a month overhead is $6.00 a unit and the cost is $16.75; at 800 it is $0.75 and $11.50. Use units you actually sell, and check the hours column against the hours you have.
You cannot reprice every month, so pick a cautious volume and hold the price. Then check the floor. The SBA's break-even formula is fixed costs / (price - variable costs). At $20.42 wholesale with $10.75 of cost before overhead, each unit leaves $9.67 and $600 / $9.67 = 62.05, so 63 units a month cover the overhead. The break-even calculator guide covers profit targets and margin of safety.
How to calculate wholesale price and retail price together
Set the wholesale price from your cost and margin, then let the retailer's margin set the shelf price: retail = wholesale / (1 - retailer's margin). A 50% retailer margin doubles the wholesale price. That x2 is the convention called keystone. It is a convention, not a rule, and each shop tells you its own terms.
| Retailer's margin | Wholesale price | Retail price | Retail / wholesale | Shop keeps per unit | You keep per unit |
|---|---|---|---|---|---|
| 40% | $20.42 | $34.03 | x1.67 | $13.61 | $8.17 |
| 45% | $20.42 | $37.12 | x1.82 | $16.70 | $8.17 |
| 50% | $20.42 | $40.83 | x2.00 | $20.42 | $8.17 |
| 55% | $20.42 | $45.37 | x2.22 | $24.95 | $8.17 |
Your $8.17 does not move; the retailer's margin only moves the shelf price. Wholesale is not a discount off retail: it is your cost plus your margin, and retail is built on top. At keystone the retail price is 3.33 times unit cost.
What a wholesale order leaves
An order of 48 candles at $20.42 invoices $980.16 and leaves $392.16 after the full unit cost, which already includes your labour and overhead.
Selling direct at the retail price
Sell the same candle yourself at $40.83 and you keep the shop's share, less selling fees. At an assumed 10% fee: $40.83 - $4.08 - $12.25 = $24.50 a unit, 60% of the price. That is 3 times the wholesale profit. Each fee point costs $0.41; at 5% the fee is $2.04 and the profit $26.54 (65%). The figure leaves out the hours you spend selling and any shipping you absorb: add those to cost if they are real.
Working back from a retail price ceiling to a maximum unit cost
If the market sets the price, run the formula backwards: maximum unit cost = retail ceiling x (1 - retailer's margin) x (1 - your margin). This is target costing. Purdue Extension's break-even guide gives the reason a ceiling exists: customers "will at some point react negatively to higher prices by buying fewer units".
Assume buyers will pay $30 for the candle, not $40.83. $30 x 0.50 = $15.00 wholesale. $15.00 x 0.60 = $9.00 maximum unit cost. The candle costs $12.25, so it is $3.25 over.
| Option | What changes | Result |
|---|---|---|
| Cut labour | Non-labour cost is $6.25, leaving $2.75 for labour: 6.9 minutes a unit instead of 15 | $9.00 cost, $15.00 wholesale, $30 retail, 40% margin kept |
| Sell more units | Even with overhead at zero the cost is $10.75 | Volume alone cannot reach $9.00 |
| Accept a thinner margin | Cost stays $12.25, wholesale is $15.00 | $2.75 a unit, an 18.33% margin |
| Sell direct only | No retailer; $30 less a 10% fee of $3.00 | $14.75 a unit, 49.17% of the price |
Each row was checked by running its result back through the calculator's own formula. A product that only works direct is still a product; it is not a wholesale line until the cost comes down.
Pricing goods you buy and resell: landed cost
For resold goods, materials are the landed cost: purchase price plus inbound freight per unit. Set labour minutes to 0. Assume a water bottle bought at $8.20, in a shipment of 400 with $240 of freight: $240 / 400 = $0.60, so the landed cost is $8.80.
Worked example: A water bottle bought and resold: landed cost, no labour (all inputs are assumptions)
| Item | Value |
|---|---|
| Materials (input) | $8.80 |
| Labour minutes per unit (input) | 0 |
| Labour cost per hour (input) | $24.00 |
| Packaging per unit (input) | $0.45 |
| Overhead a month (input) | $500.00 |
| Units sold a month (input) | 400 |
| Target margin % (input) | 40% |
| Retailer's margin % (input) | 50% |
| Selling fees % of the retail price (input) | 10% |
| Labour per unit | $0.00 |
| Overhead per unit | $1.25 |
| Total cost per unit | $10.50 |
| Wholesale price | $17.50 |
| Profit per unit at wholesale | $7.00 |
| Retail price | $35.00 |
| Retail price as a multiple of unit cost | 3.33 |
| Selling fees per unit sold direct | $3.50 |
| Profit per unit sold direct at retail | $21.00 |
| Margin kept selling direct at retail | 60% |
| Price if you MARK UP instead | $14.70 |
| Margin you actually keep with markup | 28.57% |
Computed with the same formulas as the free calculators on this site. Change any input in the calculator above to see your own numbers.
Unit cost is $10.50, wholesale $17.50, retail $35.00. Leave the freight out and the wholesale price comes to $16.50, which is $1.00 short on every unit. IRS Publication 334 lists freight-in on "merchandise you purchase for sale" as part of cost of goods sold, so it belongs in cost on the tax side as well. Duties and repacking minutes go in the same way.
The common mistake: adding your margin as a markup
Multiplying cost by 1.40 is not a 40% margin. On the candle, $12.25 x 1.40 = $17.15, which keeps 28.57% of the price. Dividing by 0.60 gives $20.42 and keeps the full 40%. The markup vs margin calculator guide has the conversion chart. To check the margin on a price you already charge, use the profit margin calculator guide.
Product pricing calculator in Excel and Google Sheets
Five formulas rebuild the calculator, with batch inputs in place of per-unit ones. Layout: B2 = batch materials, B3 = sellable units in the batch, B4 = batch minutes, B5 = labour cost per hour, B6 = packaging per unit, B7 = overhead a month, B8 = units sold a month, B9 = your margin, B10 = retailer's margin, B11 = selling fees, B12 = retail price ceiling. Enter percentages as percentages (40%, 50%, 10%). Results go in B14 to B18, in the order below.
Total cost per unit (B14)
=B2/B3+B4/B3/60*B5+B6+B7/B8B2 = batch materials, B3 = sellable units, B4 = batch minutes, B5 = labour cost per hour, B6 = packaging, B7 = overhead a month, B8 = units sold a month. 96, 24, 360, 24, 0.75, 600, 400 returns 12.25.
Wholesale price (B15)
=B14/(1-B9)B9 = your margin. 12.25 and 40% returns 20.42.
Retail price (B16)
=B15/(1-B10)B10 = the retailer's margin. 50% returns 40.83; use 0% if you only sell direct.
Profit per unit sold direct at retail (B17)
=B16*(1-B11)-B14B11 = selling fees as a share of the price. 10% returns 24.50.
Maximum unit cost for a retail price ceiling (B18)
=B12*(1-B10)*(1-B9)B12 = the retail price buyers will pay. 30, 50% and 40% returns 9.00.
For a price list, put one product per row with the same formulas across.
Calculator, your own price sheet, or a P&L template: which to use
Use the calculator above for one product, your own sheet for a full price list, and a monthly profit and loss check to see whether those prices left a profit once real sales came in.
What to put in a product price sheet: product name, batch materials, sellable units, batch minutes, labour rate, packaging, overhead, units sold a month, your margin and the retailer's margin as inputs; unit cost, wholesale price, retail price and profit per unit on each channel as outputs. Hour-heavy handmade pieces are a different sum: see how to price crochet items, which prices by hours.
To be plain about the paid product: the monthly profit and loss template does not price individual products. It takes a month of revenue and costs and returns gross profit, gross margin, net profit, net margin and break-even revenue, with a 12-month cash flow tab. It costs $14.99 once and runs in Excel and Google Sheets.
It is the check on the prices. Assume the month's 400 candles sell as 300 wholesale and 100 direct. Revenue is $10,209. Cost of goods sold is 400 x $10.75 = $4,300. Operating expenses are $600 of overhead plus $408.30 of selling fees. Gross profit is $5,909 (57.88%), net profit $4,900.70 (48%), and break-even revenue $1,742.04. If the labour is your own unpaid time, enter only what you paid out; the $2,400 of labour then appears as profit, not cost. Type the month's real totals into the profit and loss spreadsheet. If the gross margin comes in under the plan, a cost or the sales mix has moved and the prices need another pass.
Small Business P&L + Cash Flow Tracker
A monthly profit and loss spreadsheet for Excel & Google Sheets. It is not the spreadsheet version of this guide: it does not price individual products. It shows whether the prices you set leave a profit: revenue, cost of goods sold, gross margin, net profit and break-even revenue for the month. One-time $14.99, no subscription, instant download.
See the monthly P&L template →Buy now — $14.99All 7 templates — $49Instant access by email after checkout via Payhip.
Step-by-step: Product Pricing Calculator: Cost per Unit, Wholesale Price and Retail Price
- Cost one batch. Add up the materials for a batch and time it start to finish. Example: $96 of materials and 360 minutes for 24 candles.
- Divide by sellable units. $96 / 24 = $4 of materials and 360 / 24 = 15 minutes a unit. At $24 an hour the labour is $6.00.
- Add packaging and overhead per unit. Packaging is $0.75. Overhead is $600 a month / 400 units sold = $1.50. Unit cost is $12.25.
- Divide by one minus your margin for the wholesale price. $12.25 / (1 - 0.40) = $20.42, leaving $8.17 a unit.
- Divide by one minus the retailer's margin for the retail price. $20.42 / (1 - 0.50) = $40.83. Use the margin each shop asks for; 50% is only the keystone convention.
- Check the direct-sale profit and the price ceiling. Selling direct at $40.83 with a 10% fee leaves $24.50. If buyers will not pay the retail price, work back from the ceiling to a maximum unit cost.
Small Business P&L + Cash Flow Tracker
A monthly profit and loss spreadsheet for Excel & Google Sheets. It is not the spreadsheet version of this guide: it does not price individual products. It shows whether the prices you set leave a profit: revenue, cost of goods sold, gross margin, net profit and break-even revenue for the month. One-time $14.99, no subscription, instant download.
See the Small Business P&L + Cash Flow Tracker →Buy now — $14.99All 7 templates — $49Instant access by email after checkout via Payhip.
Frequently asked questions
How do I calculate the selling price of a product?
Add materials, labour, packaging and overhead per unit to get the unit cost, then divide by one minus your margin. A $12.25 unit cost at a 40% margin gives $20.42. If a shop resells it, divide again by one minus the shop's margin for the retail price.
How do you calculate wholesale pricing?
Wholesale price = unit cost / (1 - your margin), where unit cost includes your labour and a share of overhead. With $12.25 of cost and a 40% margin the wholesale price is $20.42, which leaves $8.17 a unit. The margin is your own choice, not a set figure.
How much should I discount for wholesale?
Do not start from a discount. Build the wholesale price from cost and your margin, then set retail above it using the retailer's margin. At a 50% retailer margin, the keystone convention, wholesale is half of retail: $20.42 against $40.83.
What is a good margin for wholesale pricing?
There is no single figure, and I do not quote one. The test is arithmetic: your margin must cover profit after the full unit cost, and the retail price it produces must be one buyers will pay. Check the result against a month of real sales in a profit and loss sheet.
Is there a free product pricing calculator?
Yes. The calculator on this page is free with no signup. Enter your costs per unit, monthly overhead, units sold and the two margins, and it returns unit cost, wholesale price, retail price and profit per unit.
How do I price a product I buy and resell?
Use the landed cost as materials: purchase price plus inbound freight per unit, with labour set to zero. A bottle bought at $8.20 with $0.60 of freight lands at $8.80. Add packaging and overhead per unit, then apply your margin: $17.50 wholesale in the example.
How do I make a product pricing calculator in Excel?
Put batch materials, sellable units, batch minutes, labour rate, packaging, overhead, units sold and both margins in B2 to B10. Unit cost is =B2/B3+B4/B3/60*B5+B6+B7/B8, wholesale is cost / (1 - your margin) and retail is wholesale / (1 - retailer's margin). Google Sheets uses the same syntax.
Sources
- IRS Publication 334, Tax Guide for Small Business, chapter 6 (How To Figure Cost of Goods Sold) — Schedule C line 37 as shown in the chapter: 'Cost of labor. Do not include any amounts paid to yourself'; containers that are an integral part of the product are cost of goods sold, otherwise shipping or selling expenses; freight-in on merchandise you purchase for sale is part of cost of goods sold.
- IRS, Self-employment tax (Social Security and Medicare taxes) — The self-employment tax rate is 15.3%: 12.4% for social security and 2.9% for Medicare.
- U.S. Small Business Administration, Break-even point — Break-even formula: Fixed Costs / (Price - Variable Costs) = break-even point in units.
- Purdue Extension EC-725, Estimating Breakeven Sales for Your Small Business — Customers 'will at some point react negatively to higher prices by buying fewer units'.
I'm not a contractor, landlord or accountant. I build the pricing maths, and every number on this page shows its working so you can check it instead of trusting it. Guides are drafted with AI assistance; every worked figure is computed by the same code as the free calculators. How these guides are made → · Watch the breakdowns on YouTube →