Service Tier Pricing Calculator
Set basic, standard, and premium service prices from your costs and a target profit margin, using cost-plus pricing. Runs in your browser.
Tier pricing (50% margin)
| Tier | Cost | Price | Profit |
|---|---|---|---|
| Basic | $300 | $600 | $300 |
| Standard | $800 | $1,600 | $800 |
| Premium | $2,000 | $4,000 | $2,000 |
Cost-plus pricing for a given margin: price = cost ÷ (1 − margin). Note margin ≠ markup — a 50% margin is a 100% markup. Three tiers (good/better/best) anchor buyers toward the middle option. Consider value-based pricing too, since price need not be tied to your cost. Informational.
About this tool
Offering tiered service packages — basic, standard, premium — is a proven way to serve different budgets and nudge buyers toward a middle option. This calculator prices those tiers with cost-plus logic: you enter what each tier costs you to deliver and a target profit margin, and it computes the price that achieves that margin, along with the profit per tier. It also clears up the most common pricing mistake: margin is not markup. Margin is profit as a percentage of the price, so a 50% margin means price = cost ÷ (1 − 0.50), or double the cost — which is a 100% markup. Getting that backwards leaves money on the table or underprices the work. Three tiers also create a useful anchoring effect: presented with good/better/best, most customers avoid the cheapest and the most expensive and choose the middle, so you can design the standard tier as the one you most want to sell. Remember that cost-plus is a floor; value-based pricing can charge well above cost when the outcome justifies it. It is informational, not financial advice. Everything runs in your browser.
How to use it
- Name your tiers and enter what each costs you to deliver.
- Set the target profit margin.
- Read the price and profit for each tier.
- Design the middle tier as your target offer; consider value-based pricing on top.
Frequently asked questions
- What is the difference between margin and markup?
- Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. A 50% margin (price = 2× cost) equals a 100% markup. Confusing them is a frequent, costly pricing error — this tool uses margin.
- How is the price calculated?
- Cost-plus for a target margin: price = cost ÷ (1 − margin). At a 50% margin, a $300-cost tier prices at $300 ÷ 0.5 = $600, yielding $300 profit (50% of the price).
- Why offer three tiers?
- Tiered pricing serves different budgets and uses the anchoring/compromise effect: faced with good/better/best, many buyers pick the middle. You can design the standard tier as your most profitable target and use basic and premium to frame it.
- Should price always be based on cost?
- Cost-plus gives a floor that guarantees your margin, but it ignores the value to the customer. Value-based pricing — charging for the outcome or ROI you deliver — can be far higher than cost-plus. Use cost-plus to ensure you never lose money, and value pricing to capture more when warranted.
- What costs should I include?
- All costs to deliver that tier: your labor (at your rate), materials, software, subcontractors, and a share of overhead. Understating cost inflates apparent profit and can lead to pricing that does not actually cover the work.
- Is this financial advice?
- No. It is an informational pricing tool. Test prices in your market and adjust.