Everhour supports realistic capacity planning, while pricing work requires clean cost, margin, and revenue inputs.
Estimate total cost by combining labor hours, materials, and overhead. Know your numbers before you send the proposal.
Indirect costs on top of labor + materials
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A product price calculation answers the amount you need to charge so a sale covers direct costs and leaves the gross profit you planned. For a physical product, the cost base can include materials, direct production labor, packaging, freight-in, and allocable manufacturing overhead. For a service product or packaged project, the cost base usually starts with delivery labor and direct project expenses.
The output is a selling price, gross profit per unit, gross margin, and sometimes expected revenue at a planned volume. That result supports quotes, catalog pricing, break-even checks, and margin reviews. In a U.S. context, keep state and local sales tax separate when the tax is imposed on the buyer and remitted to the government, because those collections generally are not included in gross receipts or sales.
Target margin uses selling price as the denominator. The formula is `price = cost / (1 - target margin)`. A product with $54 in total unit cost and a 40% target gross margin needs a $90 selling price. The gross profit is $36 per unit, because $90 minus $54 equals $36, and $36 divided by $90 equals 40%.
Markup uses cost as the denominator, so it gives a different percentage for the same price. In the same example, the $36 gain on a $54 cost is a 66.67% markup. A pricing calculator should name the denominator clearly, because 40% margin and 40% markup do not produce the same selling price. At 200 units, the $90 price produces $18,000 in revenue before any sales-tax handling.
Product pricing breaks when every expense gets treated as unit cost. Gross profit for U.S. small-business tax reporting is net receipts after returns and allowances minus cost of goods sold. Inventory-based businesses generally compute COGS from beginning inventory plus purchases, labor, materials, and other costs, minus ending inventory. Manufacturers can include direct labor, materials, freight-in, and allocable factory overhead.
Operating expenses still matter, but they belong in a different profit layer. Gross profit shows the spread between sales and COGS. Net profit reflects business income after business expenses, and a U.S. sole proprietor reports net profit or loss on Schedule C. For planning, you can add an overhead recovery target to the price, but do not label every operating expense as COGS unless the cost fits that category.
A one-off calculator is enough when you need a single price check, a quote review, or a quick margin comparison before sending a proposal. It works best when the cost inputs are already known, the target margin is fixed, and the selling price does not depend on ongoing staffing, schedule capacity, or changing delivery hours.
A managed workflow matters when product pricing depends on people, availability, and planned-versus-actual delivery time. Everhour Resource Planning shows capacity on visual timelines with member and project views, weekly capacity, availability gaps, scheduled time off, and planned-versus-actual comparisons. That gives managers a stronger basis for pricing repeatable service products, retainers, and packaged delivery work.
This content is for general information only, may not be fully up to date, and is provided without any warranty or liability.
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Divide total unit cost by `1 - target margin`. A product with $54 in unit cost and a 40% target gross margin needs a $90 price. The $36 difference is gross profit, and $36 divided by the $90 selling price equals 40%. The margin denominator is selling price, not cost.
Include costs directly tied to producing, purchasing, or delivering the product. For manufacturers, that can include materials, production labor, freight-in, and allocable manufacturing overhead. Retailers usually focus on purchase cost and inventory-related costs. Service products usually use delivery labor and direct project expenses, while general business expenses sit below gross profit.
State and local sales-tax treatment depends on who the tax is imposed on. If a seller collects buyer-imposed state or local taxes and remits them to the government, those collections generally are excluded from gross receipts or sales. The United States has state and local sales taxes, and it does not have a federal VAT or national sales tax.
Markup divides profit by cost, while margin divides profit by selling price. A $36 gain on a $54 cost is a 66.67% markup. The same $36 gain on a $90 selling price is a 40% margin. Mixing the two percentages causes underpricing when the target is a margin.
Everhour Resource Planning shows work on visual timelines with member and project views, weekly capacity, availability gaps, scheduled time off, and planned-versus-actual time. Productized service teams can compare planned delivery effort with actual workload before setting or revising package prices.
Everhour Project Budgeting tracks hour-based and money-based budgets as people log time and expenses. Teams can use recurring budgets, include or exclude expenses from fee budgets, and send alerts at 75%, 90%, 100%, or custom thresholds when priced work approaches its limit.
Plan prices from real delivery capacity, then track planned-versus-actual work as projects move. Everhour Resource Planning keeps workload, availability, and project timing visible for better pricing decisions.
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