HOW THIS TOOL WORKS
Understand your result
Set a price using real material, time and selling costs instead of guessing. This calculator uses the inputs above to produce a planning estimate. It does not predict sales or guarantee that the modeled price will work for your buyers.
Calculation formula
Total item cost = materials + (labor hours × hourly rate) + packaging + allocated overhead. Price = total item cost ÷ [1 − selling-fee rate − desired profit margin]. Margin means profit divided by selling price, not profit divided by cost.
Worked example
With $8 materials, 1.5 hours at $18/hour, $1.50 packaging and $3 overhead, cost is $39.50. With an 8% selling fee and 25% target margin, modeled price = $39.50 ÷ 0.67 = $58.96.
Before you rely on the estimate
- Treat your hourly rate as a planning cost, not as guaranteed cash wages.
- This formula assumes percentage-based selling fees; add fixed per-order fees to your costs if they apply.
- Compare your modeled price with customers’ willingness to pay; a calculator cannot establish market demand.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit divided by selling price. Markup is profit divided by cost. A 25% margin is not the same as adding 25% to your costs.
Can I enter zero for labor?
You can, but the estimate will not compensate your making time. For sustainable pricing, consider entering a realistic hourly value.
Does this include tax?
No. Sales tax and income tax are not built into the formula.