Cost Based Pricing Calculator
Full absorbed cost, then a margin on top.
Fully absorbed price
$40.00
$12.00 of overhead per unit
The allocation depends on a volume assumption. If sales come in below it, the overhead per unit rises and the price no longer covers the fixed base.
How the Cost Based Pricing Calculator works
Cost-based pricing allocates a share of fixed overhead into every unit before applying margin. It guarantees that overheads are covered if you hit your volume assumption — and quietly misprices everything if you do not.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price — check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
How does cost-based pricing differ from cost-plus?
Cost-plus applies a markup to direct costs only. Cost-based absorbs a share of fixed overhead first, so the price covers a portion of rent and salaries as well as materials.
How do I allocate fixed overhead per unit?
Total fixed costs ÷ expected units. The weakness is circular: fewer sales means a higher allocation, which suggests a higher price, which usually means fewer sales still.
What volume assumption should I use?
A conservative one. Allocating overhead across optimistic volume understates unit cost and produces prices that do not cover your fixed base when reality falls short.
When is this the wrong approach?
In competitive markets where the price is effectively set by others. There, work backwards — take the market price, subtract the margin you need, and find out whether your cost base can fit inside what remains.