How the recommended price works
The calculator adds direct unit costs and each unit's share of annual fixed costs. It then divides that loaded cost by the percentage of revenue remaining after the transaction fee and target margin.
Price = Loaded unit cost ÷ (1 − Fee rate − Target margin)
Important limitations
- Volume is an assumption; fixed-cost recovery and realized margin change when sales volume changes.
- Does not model tiered fees, refunds, discounts, sales tax, inventory losses, capacity limits, or price elasticity.
- Use contribution margin—not revenue alone—to evaluate whether each additional sale supports the business.
Frequently asked questions
What is the difference between margin and markup?
Margin divides profit by selling price. Markup divides profit by cost. A 25% margin requires a 33.33% markup before percentage transaction fees.
Why are fixed costs divided by target units?
Allocating annual fixed costs across expected volume estimates the overhead each unit must recover. If actual volume is lower, realized profit will also be lower.
Why does a percentage fee increase the required price?
Because the fee rises with price. The calculator solves for price after reserving both the fee percentage and target profit margin.
Can I use this for services?
Yes. Treat one package, engagement, or billable block as a unit and enter its direct labor and delivery costs.