Using the formula selling price = (cost) + (desired profit margin), calculate the selling price with the following steps: 1. Related: Cost of Sales: A Definitive Guide (With Example) How to calculate selling price Then, you can use this price point in addition to other factors like competitive prices to set the most reasonable selling price for your offering. The result allows you to get an idea of where you should start your product pricing. In the formula, the revenue is the selling price, the cost represents the cost of goods sold (the expenses you incur to produce or purchase goods to sell) and the desired profit margin is what you hope to earn. Selling price = (cost) + (desired profit margin) However, there is a simple formula for calculating the average selling price, which provides a valuable starting point for determining the most suitable price points for your products or services: The methods businesses and organizations use to evaluate questions like these and calculate selling prices can vary depending on the type of operations and overall goals. What is a suitable price to compete in the market? What is an acceptable price that supports sales and revenue goals? What price are customers willing to pay for a product or service? Additionally, businesses and organizations typically evaluate various factors when calculating suitable selling prices and may ask questions such as: The selling price is important for establishing the revenue a business needs to earn in order to reach a set profit margin. The selling price is the amount customers pay to purchase a product or service and includes the value of an offering plus a value that covers the costs of selling the offering, or the cost of goods sold.

Selling price per unit calculator