How to use this calculator
- Enter or choose cost per unit.
- Enter or choose target gross margin.
- The selling price updates as you type. Use Copy result or Share to keep it.
Method
Price = Cost ÷ (1 − Margin); Profit = Price − Cost; Markup = Margin ÷ (1 − Margin)
- Cost
- cost per unit
- Margin
- target gross margin as a decimal (profit ÷ price)
Worked example
- Price = 60 ÷ (1 − 0.40) = 60 ÷ 0.60 = $100.
- Profit = 100 − 60 = $40, which is 40% of the $100 price.
- Markup = 40 ÷ 60 = 66.67% of cost.
To earn a 40% margin on an item costing $60, sell it for $100.
What the result means
Margin is profit as a share of the price; markup is profit as a share of cost. The same $40 profit is a 40% margin but a 66.67% markup. Adding 40% to $60 gives $84, which is only a 28.6% margin.
Assumptions and limits
- Cost is the full cost of one unit that you want covered by the margin.
- This is gross margin: overheads, tax and payment fees are not included unless you add them to the cost.
Questions
What markup gives a 30% margin?
Markup = 0.30 ÷ 0.70 = 42.86%. A $70 cost marked up 42.86% sells for $100, a 30% margin.
Can a margin be 100%?
Only if the cost is zero. As the margin approaches 100%, the required price grows without limit.