How this calculator works
It works forward, from cost to a price: you say what one unit costs to make, and it says what to charge to keep a given share of the money. It does not work backward from a price you already have, and it does not know what a marketplace takes out of a sale.
The arithmetic is short enough to check by hand. Your labor cost is your hourly rate multiplied by the minutes you spent, divided by sixty. Your full cost is every material line added together, plus that labor figure. A suggested price is the full cost multiplied by one plus the markup: a 100% markup doubles it, 150% multiplies it by 2.5, and the editable third row starts at 200%, which multiplies it by three. Margin is the other way round — the price minus the cost, divided by the price, as a percentage. Every money figure is rounded to the nearest cent, with halves rounded away from zero, so the numbers you see are the numbers that add up.
A worked example: a lavender candle
This is a worked example, not a real ledger: the figures illustrate the method rather than report anyone’s costs. One lavender candle, three material lines, and ten minutes of your time at $15.00 an hour.
Cost breakdown and suggested prices for the worked example| Wax | $2.22 |
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| Fragrance oil | $1.92 |
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| Jar, wick and label | $1.10 |
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| Labor — 10 minutes at $15.00/hour | $2.50 |
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| Full cost per unit | $7.74 |
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| Wholesale — 100% markup | $15.4850.0% margin |
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| Retail — 150% markup | $19.3560.0% margin |
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This calculator has one labor line, while most makers also carry a little overhead: studio rent, a share of the electricity, the wax that ends up on the bench. Fold that into the hourly rate you enter, or add it as a material line; the $2.50 figure above is where it goes. And the cost side is the part that moves: wax costs one thing this month and something else next month, so a price set from a cost you measured in January quietly stops working around April.
What this number leaves out
The calculator stops at the workbench. Everything below happens after it:
- Overhead — rent, utilities, insurance, software, the hours spent not making. Unless it is folded into your hourly rate, it is not in the number.
- Packaging and shipping supplies — boxes, tissue, tape, labels, the mailer. Cheap per unit, easy to forget until you add up a year of them.
- Payment processing — the percentage and the flat charge on every transaction.
- Listing and transaction fees — what a marketplace charges to list and to take the money.
- Offsite and promoted-ads fees, charged on the sale after the fact rather than quoted.
- Returns — the ones you take back, and the shipping you do not get back.
Trackost records those on each order, so true profit is what is left after them. It is why a price that looks healthy here can still leave a product underwater over a year of orders.
Markup versus margin
These are two ways of describing the same gap, and they are easy to confuse. Markup is measured against your cost: a 100% markup means you added your cost again on top of itself. Margin is measured against your price: the same product, doubled, keeps 50.0% of what the buyer pays. So a 100% markup is a 50.0% margin, and a 150% markup is a 60.0% margin. A maker who hears “I need a 50% margin” and multiplies by 1.5 has set a 33% margin instead, and will wonder for a year where the money went.
The gap between the two tiers is what makes wholesale possible: a shop has to shelve the product, staff the counter and still make something, so it needs room between what it pays you and what it charges. If retail is roughly double wholesale, a stockist can reach the same shelf price you charge yourself, and you have not undercut the people selling your work.
Questions makers ask
What hourly rate should I pay myself?
Start with what you would have to pay someone else to do the same work, and do not go below it. The rate in the field above is a placeholder, not a recommendation. If the resulting price frightens you, that is information about the product, not a reason to pay yourself less.
Should I include marketplace fees in my cost?
Not here. Fold them in and you can no longer tell what the product costs to make, which is the figure you need when a material price moves. Price from cost first, then look at what each place you sell actually takes out, and treat that as a separate decision per channel.
Why is wholesale half of retail?
Because the shop has to live on the other half. The convention is not a rule handed down from anywhere, but it is the one buyers expect, and quoting a wholesale price that leaves no room is the fastest way to be passed over by a stockist.
How often should I re-cost a product?
Whenever an input price changes, which is more often than it feels. The practical answer is that re-costing by hand is the part nobody keeps up, so either put a date in the calendar or let something re-average it for you every time you buy.
What if the market will not pay my retail price?
Then you have learned it before printing the labels. Take cost out, take time out, sell a different product, or accept a thinner margin knowingly, all better than finding the gap a year later. The one option not available is pretending the cost is lower than it is.
Trackost keeps this number live for every product you make. See pricing and free migration.