Product Pricing Calculator

Effective product pricing balances three factors: your costs, customer perceived value, and competitive positioning. Cost-plus pricing (adding a fixed margin to your total cost) is the most straightforward approach and ensures profitability, but it ignores what customers are willing to pay and what competitors charge.

Your all-in cost per unit should include not just materials and labor (COGS), but also allocated overhead such as rent, utilities, equipment depreciation, software subscriptions, and shipping materials. Many businesses underestimate their true cost per unit by omitting these indirect costs, leading to margins that look healthy on paper but fail to cover actual expenses.

Competitor-based pricing provides a market reality check. If your cost-plus price is significantly higher than competitors, you need either a clear value differentiation (better quality, brand, or service) or a way to reduce costs. If your price is well below competitors, you may be leaving money on the table or may have missed hidden costs.

A price ladder strategy (economy, standard, premium) captures different market segments and uses price anchoring psychology. The premium option makes the standard option look like a better value, while the economy option captures price-sensitive buyers. Most customers naturally gravitate toward the middle option, which is typically where you want to optimize your margins.