How does cost-plus pricing work?

You add a fixed markup percentage to your unit cost. Selling price = cost × (1 + markup ÷ 100). A cost of 50 with a 40% markup gives a price of 70.

Why is the margin lower than the markup?

Markup is measured against cost while margin is measured against the higher selling price, so the margin percentage is always smaller. A 40% markup on cost equals a 28.57% margin.

What markup do I need for a 50% margin?

A 100% markup. Margin and markup are not the same — to hit a 50% margin you must double the cost, since margin is measured against the selling price while markup is measured against cost.

When is cost-plus pricing a good choice?

It works well when costs are predictable and you want a guaranteed profit per unit — common in manufacturing, retail and contracting. It ignores demand and competition, so pair it with market checks for price-sensitive products.

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What is the Cost-Plus Pricing Calculator?

Free cost-plus pricing calculator. Add a markup percentage to your unit cost to get the selling price, profit per unit and the resulting profit margin. Runs entirely in your browser. It runs free in your browser on Gera Tools, with nothing uploaded.

Cost-Plus Pricing Calculator

Name: Cost-Plus Pricing Calculator
Creator: Gera Tools
License: https://creativecommons.org/licenses/by/4.0/

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Cost-plus pricing is the simplest way to set a selling price: take your unit cost and add a fixed markup percentage on top. This calculator returns the selling price, the profit per unit, and the resulting profit margin, so you can price products and services with a guaranteed return baked in. It also shows the markup-versus-margin distinction clearly, which trips up many sellers and causes costly pricing errors.

How the formula works

The selling price is the cost plus the markup expressed as a percentage of cost:

profit       = cost × (markup ÷ 100)
selling price = cost + profit

The margin — what finance teams and buyers typically quote — is the profit as a share of the selling price, not the cost:

margin = (profit ÷ selling price) × 100

Because the margin’s denominator is the larger selling price, the margin percentage is always smaller than the markup percentage.

Worked example

A unit cost of £50 with a 40% markup:

Profit = £50 × 0.40 = £20
Selling price = £50 + £20 = £70
Margin = £20 ÷ £70 × 100 ≈ 28.57%

A 40% markup on cost translates to only a 28.57% margin on revenue. This gap surprises many first-time product pricers, especially when targets are set as margin percentages by finance.

The markup-margin conversion

The relationship between markup and margin:

Markup on cost	Resulting margin on revenue
10%	9.09%
25%	20.00%
40%	28.57%
50%	33.33%
100%	50.00%
200%	66.67%

To reach a target margin of M%, you need a markup of: M ÷ (100 − M) × 100. For a 50% margin you need a 100% markup; for a 30% margin, approximately a 43% markup.

When cost-plus pricing works — and when it does not

Cost-plus pricing is well-suited to:

Manufacturing and retail, where unit costs are predictable and consistent margins are required across a product range.
Contracting and consultancy, where you quote a price before the job starts and need to ensure every job contributes to overhead.
Commodity markets, where pricing power is limited and maintaining margin over cost is the core discipline.

It struggles when:

Demand is price-sensitive and competitors price to what the market will bear, not to their costs.
Perceived value is high and the product could command a far higher price than the cost-plus formula produces.
Costs vary by order size and a fixed markup does not reflect the economics of scale.

Use cost-plus as a floor — the minimum price that covers costs — and layer market and competitor pricing on top to find where to actually set the number.