Product Pricing Calculator

Set the right price for your product — factoring in all costs, your target profit margin, VAT and market positioning.

Direct material cost per unit (£)

Direct labour cost per unit (£)

Overhead allocation per unit (£)

Target gross profit margin (%)

VAT status

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Fill in the details to get your result.

How This Works

Selling price = total unit cost / (1 - target margin). For example, at 40% margin: if cost is £16.50, selling price = £16.50 / 0.60 = £27.50. This gives exactly 40% gross margin. VAT is then added on top for VAT-registered businesses — it is not part of your revenue, it is collected on HMRC's behalf.

Three main approaches: Cost-plus pricing (cost + target margin, as calculated here) — simple but ignores market. Value-based pricing (charge what the customer's benefit is worth) — often yields higher prices for unique products. Competitive pricing (match or undercut competitors) — risky on margin. For most small product businesses, start with cost-plus to ensure viability, then test whether the market accepts higher prices based on value. Never price below cost without a deliberate strategic reason.