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Target Margin Price Calculator

Enter the unit cost and target margin to find the required selling price.

Result

$64.29
$19.29
42.86%

How it is calculated

The tool uses price = cost ÷ (1 − margin ÷ 100), where cost is your unit cost and margin is the desired gross margin in percent of the selling price. It then reports profit = price − cost and the equivalent markup on cost, markup = profit ÷ cost × 100. Cost must not be negative, and the margin must be at least 0 and strictly below 100, because a 100% margin would need an infinite price; those inputs return no result. A margin of 0 gives a price equal to cost. All money is shown in dollars to two decimals. Taxes, discounts, fees and shipping are not part of the calculation unless you include them in the cost.

Worked example

An item costs 45 and you want a 30% gross margin. The share of the price that is cost is 1 − 0.30 = 0.70. Price = 45 ÷ 0.70 = $64.29. Profit = 64.29 − 45 = $19.29. As a markup on cost that is 19.29 ÷ 45 × 100 = 42.86%, which is why a 30% margin needs a markup well above 30%.

Try this example →

Common mistakes

  • Computing price as cost × 1.30 for a 30% margin. That is a 30% markup, which gives only about a 23.1% margin; the tool divides by 0.70 instead.
  • Mixing up margin and markup. Margin is a share of the price, markup a share of the cost, so the same sale shows a larger markup than margin.
  • Entering 0.30 instead of 30. The margin field is a percentage, and 0.30 would be read as 0.3%.
  • Leaving costs out of the cost field, such as packaging, payment fees or shipping you pay. The margin is only reached if the cost entered is the full cost.
  • Trying a 100% margin to see a "free" price. It is not a valid input and returns nothing.

Sources

About this calculator

Gross margin is expressed as a percentage of the selling price, not of cost — which is why solving for a target-margin price isn't as simple as adding a markup to cost. The correct formula is price = cost ÷ (1 − target margin%); for example, a $60 unit cost at a target 40% margin gives $60 ÷ 0.60 = $100, not $60 × 1.40 = $84, which would only yield a 28.6% margin.

This calculator takes a unit cost and a target gross margin percentage and returns the selling price needed to hit that margin exactly. Retailers, e-commerce sellers, and pricing and merchandising analysts use it when setting list prices from a cost sheet, so the margin they book on paper matches the margin they actually realize on each sale.

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Comments (1)

  • Editorial team

    The classic slip is charging a markup when you meant a margin. With a unit cost of 40, a 30% markup gives a price of 52, which is really a 23.08% margin, while a true 30% margin needs 57.14 (a 42.86% markup, shown in the third line). Compare the two before you send a quote. Do you price your own work by margin or by markup, and why?

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