Cost-Plus Pricing Calculator
Work out the right selling price from your unit costs, overhead allocation, target margin, and UAE VAT.
How to use
- 1
Enter the material or product cost per unit. For a reseller, this is what you pay your supplier. For a manufacturer, the cost of raw materials.
- 2
Enter the labour cost per unit. For services, this is the time × hourly cost. Skip if your business doesn't involve direct labour per unit.
- 3
Enter overhead allocation per unit. Total monthly overhead (rent, admin, software) divided by your expected monthly unit volume. If you don't know, start with 10-20% of material cost as a rough proxy.
- 4
Enter your target gross margin %. This is profit as a % of selling price. UAE retail typically 30-50%, services 40-60%, SaaS 70%+.
- 5
Tick the VAT box to see both net (B2B) and gross (consumer-facing) prices. The 5% UAE VAT is added to the cost-plus result.
- 6
Test your output. Is your selling price above the lowest market price? Below the highest? If you're far above the cheapest competitor, customers need a reason to choose you. If you're far below the most expensive, you may be leaving money on the table.
Frequently asked questions
Cost-plus = (your cost) + (target margin). Easy to calculate, protects against losses, but rarely captures the highest profitable price. Value-based = what the customer will pay. Harder to calculate, requires customer research, but usually generates 20-40% more margin. Best approach: use cost-plus as your floor, then test prices upward.
Total monthly overhead ÷ expected monthly unit volume. For a small UAE business with AED 30,000/month in rent + admin + software, expecting 1,000 units sold per month: AED 30 overhead per unit. Recalculate quarterly as volume changes.
Mandatory if your annual taxable turnover exceeds AED 375,000. Voluntary above AED 187,500. Below those thresholds, you can't charge VAT and you can't recover input VAT on purchases — neutral position for very small businesses.
Yes, but only by reducing costs. Negotiate better with suppliers, batch orders to reduce per-unit packaging, automate labour-heavy steps, share overhead across more products. Cutting price alone with the same costs reduces margin proportionally.
Hugely category-dependent. Mass-market grocery: 5-15%. Fashion apparel: 50-65%. Restaurants: 60-70% on food, 75-85% on drinks (offset by labour cost). Premium electronics: 5-15%. Luxury: 60-80%. Check the prevailing competitor pricing in your specific category.
Three usual reasons. (1) You forgot to include overhead, so 'cost' was understated. (2) Discounts and promotions erode the displayed margin. (3) Variable costs scale with volume in ways you didn't model. Track ACTUAL gross margin from sales data monthly to catch drift.
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Source: Standard cost-plus pricing model · Last verified 2026-06. This tool provides estimates only and is not legal, tax or financial advice. Always verify your specific situation with the relevant UAE authority or a licensed advisor before taking action.