Own brand margin calculator: is the product worth launching?
Enter a shelf price and your costs. You see what remains per unit, how many units repay the one-off costs and how much cash the first batch ties up.
Who should use this private label margin calculator
This private label margin and break-even calculator is for anyone considering an own-brand product who has at least a rough price and a factory quote. Use it before paying for a logo or a sample. If the numbers fail with optimistic inputs, no amount of branding will fix them.
It is particularly useful for comparing options: two channels, two order sizes or two factory quotes. If you have no factory quote yet, put in a reasonable estimate, then try it again 20% higher. Nothing you enter leaves your browser.
Result per unit
- You receive after tax and channel
- Landed cost
- Gross margin
- Left after marketing
- Units to recover one-off costs
- Cash for the first batch and one-offs
Same currency in all money fields. Duty is calculated on factory price plus freight, which is simplified. Nothing you enter leaves your browser.
How to read the result, and the formulas behind it
The calculator works from the shelf price backwards, because the amount a shopper pays is not what you receive.
Net price: what reaches you
Net price = shelf price / (1 + VAT) × (1 − channel %). Take VAT or sales tax out first, then the retailer’s margin or the marketplace fees.
Landed cost: what the unit really costs
Landed cost = factory price + packaging + freight + (factory price + freight) × duty %. Duty here is simplified. Customs value and the rate depend on the goods and the route, so confirm them with a customs broker.
Gross margin and contribution
Gross margin = net price − landed cost. Subtract marketing per unit to see what is left over to pay for one-off costs, your overheads and profit. As a rough guide, the calculator reads the gross margin as a share of net price: under 30% leaves little room, 30–50% is workable in many categories if the volume is real, and over 50% is healthy on paper.
Break-even
Break-even units = one-off costs / (gross margin − marketing per unit). Compare this with your first batch. If break-even exceeds the batch, you only recover the one-off costs with a reorder. If marketing takes the whole margin, break-even does not exist at these numbers.
A worked example
These figures are invented for illustration and are not market data. Shelf price 24, VAT 20%, channel 30%: net price is 24 / 1.2 × 0.7 = 14. Factory 4, packaging 0.60, freight 0.50, duty 5%: landed cost is 4 + 0.60 + 0.50 + 0.225 = 5.325. Gross margin is 8.675 per unit. With marketing at 2 per unit, 6.675 remains, so one-off costs of 10,000 need about 1,500 units to recover.
What it does not cover
Returns, discounts, unsold stock, financing costs and your own overheads are not included. Try a price 15% lower and a slower sale before trusting a good result. To understand what goes into one-off costs, read how costs are structured; to decide on a model, compare private label, white label, OEM and ODM.
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