Pricing Calculator
Calculate product pricing with cost, markup, margin and competitive pricing analysis with volume discount tiers
Pricing
Cost
£10.00
Selling Price
£14.29
Profit Per Unit
£4.29
Margin %
30.0%
Bulk Pricing
| Quantity | Discount | Unit Price | Total |
|---|---|---|---|
| 1 | -0% | £14.29 | £14.29 |
| 10 | -5% | £13.57 | £135.71 |
| 50 | -10% | £12.86 | £642.86 |
| 100 | -15% | £12.14 | £1,214.29 |
| 500 | -20% | £11.43 | £5,714.29 |
Margin vs Markup: The Distinction That Costs Sellers Money
Markup and margin describe the same gap between cost and selling price but from different angles, and confusing them is one of the most common pricing mistakes. Markup is profit as a percentage of cost: a £10 item sold for £15 has a 50% markup. Margin is profit as a percentage of selling price: the same item has a 33% margin. A 100% markup gives you a 50% margin; a 50% markup gives you a 33% margin. The calculator handles both modes so you can switch depending on which way your supplier or industry typically quotes.
Most retailers think in markup ('I need to mark this up 50%') because it is intuitive when buying stock. Most accountants think in margin because it is what shows on a P&L statement. If your supplier quotes you 'we sell to you with a 30% margin' that means they paid £7 for what they sell to you at £10. If they say '30% markup' they paid £7.69 and sell at £10. Always confirm which one is meant - the difference on a £100k stock buy is around £2,300.
Volume Discount Tiers: When They Help and When They Hurt
The bulk discount preview shows what your selling price becomes at 1, 10, 50, 100 and 500 unit tiers. Volume tiers work brilliantly for B2B - a craft supplier selling 500 metres of fabric to a clothing brand expects a discount that a single retail customer would never see. They can backfire for B2C if they cannibalise full-margin sales by training customers to wait for bulk deals.
The standard tier set used here (5%, 10%, 15%, 20% at 10/50/100/500 units) is conservative for handmade goods (where labour cost barely scales) and aggressive for digital products (where unit cost is near-zero). For physical goods, the discount should roughly track the cost saving of bulk fulfilment - lower packaging cost per unit, fewer transactions, less customer service time. If your bulk discount is bigger than your per-unit cost saving, you are buying volume at the expense of margin. The [Profit Margin Calculator](/profit-margin-calculator) lets you sense-check the real margin at each tier.
Real-World Pricing Pressure: Competitors, Costs and the 'Just Price It Higher' Myth
Common pricing advice for new sellers - 'just charge more, you are undervaluing yourself' - works only when something else holds the line. If competitors sell the same product at £40 and you price at £60, you need either a strong brand, a better product (and the marketing to communicate it), or a niche where price sensitivity is low. For commodity products, the realistic ceiling is competitor price plus maybe 15-20% if your reviews and presentation justify a premium.
Cost-plus pricing (cost x markup) sets a floor on what you can charge sustainably; the market sets a ceiling. The right price is somewhere in that band, weighted toward the ceiling early on (to fund growth) and toward the floor when you have stock to clear or are competing in a saturated category. Mid-month rate changes are a signal worth tracking - if you keep nudging price up because demand is strong, your initial price was too low; if you keep dropping it because nothing is selling, the cost-plus calculation was optimistic about demand.
Frequently Asked Questions
What margin should I aim for?
Highly category-dependent. UK groceries run on 2-5% margins. UK retail clothing typically targets 50-60% gross margin. SaaS targets 70-90%. Handmade goods on Etsy usually target 40-50% after fees. Restaurants 60-70% on food, 70-80% on drink. The right margin is whatever covers your fixed costs, lets you reinvest, and survives the price competition in your category. Aiming for 'as much as possible' without context will price you out of the market in commodity categories.
Should I include VAT in my pricing calculation?
If you are below the £90,000 VAT threshold and not voluntarily registered, no - your selling price is the price the customer pays. If you are VAT registered, the calculation is usually done on the ex-VAT price (the price you actually keep) and 20% is added on top for consumer-facing pricing. Many small UK retailers stay just below the £90k threshold to avoid the 20% jump in customer-facing prices that VAT registration triggers; check the [VAT Calculator](/vat-calculator) to see exactly what the gross figure becomes.
What is keystone pricing?
A 100% markup, doubling the cost. Used historically by US retailers and still common in fashion and gift retail. £10 cost becomes £20 retail, giving a 50% margin. It is a useful starting point but not a universal answer - some categories (e.g. groceries, jewellery) use very different markups.
How do I price for psychological pricing (£9.99 vs £10)?
The £9.99 'charm price' lifts perceived value enough in mass-market retail to offset the lost penny - studies show 5-10% sales lift in B2C consumer goods. It works less well for premium goods, where round numbers (£10, £100, £1,000) signal confidence. £9.99 on a £4 craft fair earring looks discount-store; £10 looks intentional. Match your pricing convention to your brand position rather than blindly applying the .99 trick.
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