PRACTICAL TOOL

Service pricing calculator

Work backward from supplies, labor, and your target margin. See the difference between markup and margin before changing your price list.

How the calculation works

Assigned cost = materials + (labor minutes ÷ 60 × hourly cost) + allocated overhead. Price = assigned cost ÷ [1 − target margin − payment fee], with percentages expressed as decimals. The remaining amount after assigned cost and the modeled payment fee equals the chosen fraction of the selling price. Margin plus fee must be below 100%.

A worked example

At $7 supplies, 35 minutes of labor at $30/hour, and $4 allocated overhead, assigned cost is $28.50. A 35% target and 3% fee give $28.50 ÷ 0.62 = approximately $45.97. The fee is approximately $1.38 and the modeled contribution is $16.09. Displayed values are rounded; calculations use full precision.

What the result does not tell you

The calculator does not establish market willingness to pay or automatically include rent, tax, benefits, rework, guarantees, or every payment charge. Avoid adding the same cost twice. A contribution after assigned costs is not necessarily the shop’s net profit. Use a consistent cost definition and compare with actual results before changing a published price.

Try a sensitivity check

Increase labor minutes by ten and compare the required price. Then change the target margin without changing cost. If a small difference in time changes the decision, prioritize better time records. If the price is impractical, revisit service scope, workflow, and the target rather than treating labor as free.