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Service Pricing

Set a service price from hourly cost and desired margin.

About Service Pricing

The service cost is divided by one minus the margin so that margin is earned on the final price. Time-based services priced at cost-plus only stay healthy when the rate reflects the margin, not just hours.

Formula

Service Pricing

Price = cost / (1 - margin)

margin
Share of sale price retained as profit

Worked example

With the default values below, Service Pricing returns Service Price of $750.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Cost per hour
45
Hours of serviceminimum 1
10
Target marginaccepts 0–90 %
40 %

Results

Cost of Service
$450.00
Service Price
$750.00
Profit on Service
$300.00

Step by step

  1. 1Values used
  2. 2Service Pricing
  3. 3Service Price= 750.00
  4. 4Cost of Service= 450.00
  5. 5Profit on Service= 300.00

Assumptions and limits

  • The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Service Pricing calculated?

Price = cost / (1 - margin) The service cost is divided by one minus the margin so that margin is earned on the final price.

Why does Service Pricing matter?

Time-based services priced at cost-plus only stay healthy when the rate reflects the margin, not just hours.

What values do I need to enter?

This calculator takes 3 inputs: Cost per hour, Hours of service, Target margin. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.

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Service Pricing – Calculate Service Price & Cost of Service