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Cost from Margin Calculator

Enter the selling price and margin to get the implied cost and profit per unit.

Result

How it is calculated

The tool treats margin as a share of the selling price: cost = price × (1 − margin ÷ 100) and profit = price − cost. Price is the per-unit selling price in currency, and margin is a percentage number, so 35 means 35%. Both results are rounded to cents and shown in dollars. The price must be above zero and the margin must be below 100, because a 100% margin would mean a cost of zero; outside that range no result is shown. A negative margin is accepted and describes selling below cost: the cost then comes out higher than the price and the profit line shows a negative amount. Margin is not markup: markup is a percentage of cost, so the same cost needs a different number there.

Worked example

An item sells for 80 and your target gross margin is 35%. Convert the margin to a fraction: 35 ÷ 100 = 0.35, so 1 − 0.35 = 0.65. Cost = 80 × 0.65 = $52.00. Profit = 80 − 52 = $28.00, which is 28 ÷ 80 = 35% of the price, as expected. Relative to cost, that same profit is 28 ÷ 52, about 53.8% markup.

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Common mistakes

  • Entering a markup percentage in the margin field. A 25% markup is a 20% margin, so using 25 would produce a cost that is too low.
  • Typing the margin as a fraction (0.35). The field expects a percentage number, and 0.35 would be read as 0.35%, giving almost the full price as cost.
  • Entering the profit amount instead of the price, or the cost price instead of the selling price. The tool needs the selling price to work backwards.
  • Including tax in the price. If the shelf price contains VAT, take the tax out first, otherwise the implied cost is overstated.

Sources

About this calculator

This calculator reverses a margin calculation to find the underlying cost: cost = price × (1 − margin%). It's important not to confuse this with markup — margin is always a percentage of the selling price, while markup is a percentage of cost, so a 25% margin and a 25% markup on the same item imply different costs (a $100 item at 25% margin costs $75, but at 25% markup it costs $80).

Retail buyers use this to reverse-engineer what a supplier likely paid or is charging when only the shelf price and a typical category margin are known, and small business owners use it to check whether a price they're considering actually delivers the profit margin they're targeting before committing to it.

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