How to Set the Right Selling Price for a Product: Pricing and Profit Margin Guide

To set the right selling price, calculate the actual unit cost, including purchasing, shipping, and directly attributable expenses. Then choose a target gross profit margin while considering operating expenses, competitor prices, and customer demand.

Use the formula: Selling Price = Unit Cost ÷ (1 − Target Gross Margin). For example, a product costing 70 with a 30% target margin should sell for 100 before applicable taxes. Review pricing when costs or demand change, and monitor profitability by product. Try Cash Cloud for free to explore sales, purchasing, inventory, and profit reporting tools.