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Good-Better-Best Tier Margin Calculator

Enter the price and cost of each tier to see its profit margin.

How it is calculated

Each of the three tiers is calculated on its own with the same formula: margin % = (price − cost) ÷ price × 100. Price is what the customer pays for one unit or one subscription period of that tier, and cost is what delivering that same unit costs you, in the same currency and the same period.

The tool needs all six numbers. Prices must be above zero; cost may be zero, and a cost higher than the price is accepted and gives a negative margin. Results are shown with two decimals and are independent of each other, so changing one tier never moves the others. The tool does not weigh the tiers by how many customers choose each one, so the numbers are per-unit margins, not the blended margin of your whole business.

Worked example

A software plan sells at three tiers. Good: price 29, cost 12. Better: price 59, cost 21. Best: price 99, cost 30, all per month.

Good: (29 − 12) ÷ 29 = 58.62%. Better: (59 − 21) ÷ 59 = 64.41%. Best: (99 − 30) ÷ 99 = 69.70%. The top tier has the highest margin, and every tier is profitable, though the cheapest one keeps the thinnest share of its price.

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Common mistakes

  • Entering margin or markup in the cost field. Cost is a money amount; the tool calculates the margin itself.
  • Confusing margin with markup. The best tier above has a margin of 69.70% but a markup of 230% over its cost.
  • Using different cost bases for different tiers, for example including support cost for Best but not for Good, which makes the comparison unfair.
  • Mixing periods, such as an annual price for one tier and monthly cost for another.
  • Reading a high percentage as the most profitable tier. A tier with a lower margin may still earn more total money if far more customers pick it.

Sources

About this calculator

Good-Better-Best (GBB) pricing is a tiering strategy — popularized in retail and SaaS pricing research by economists like Rafi Mohammed — that offers three versions of a product at ascending price points to capture different customer willingness-to-pay. Each tier's profitability is judged the same way: margin % = (price − cost) ÷ price × 100, the standard gross-margin formula.

Because the "best" tier usually carries premium features at a higher price but not proportionally higher cost, it often posts the fattest margin, while a competitively priced "good" tier can run thin — sometimes intentionally, to anchor value and funnel buyers toward the middle option. Comparing all three margins side by side is how product and pricing teams check that no tier is unintentionally unprofitable.

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Comments (1)

  • Editorial team

    Percent margins can mislead across tiers. In the defaults the top tier shows 64 percent against 40 for the entry tier, but in money terms it leaves 320 per sale versus 40. Since the tool does not weigh by sales mix, multiply each margin by how many of each tier you expect to sell before judging the lineup. Which tier do most of your customers pick, or which would you expect them to pick?

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