Selling Price Calculator
Calculate required selling price based on cost and target profit margin or markup.
Enter unit cost and target to calculate price.
Calculate required customer selling price instantly.
A $100.00 selling price yields $60.00 profit on $40.00 cost.
Formulas & Logic
Transparent mathematical formulas behind this calculation engine.
Selling Price from Target Margin
Selling Price = Cost ÷ (1 - (Target Margin ÷ 100))Use this formula when you know your acquisition cost and want to ensure a specific percentage of final customer revenue is retained as profit.
Selling Price from Target Markup
Selling Price = Cost × (1 + (Target Markup ÷ 100))The standard cost-plus formula: adds a direct percentage markup on top of your unit cost to establish the retail price.
Gross Profit ($)
Gross Profit = Selling Price - CostThe actual dollar earnings generated per unit sold before operating overhead.
Worked Example
Retail Pricing Example ($40 Cost with 60% Margin Goal)
An ecommerce brand manufactures an item for $40.00 and targets a 60% profit margin to cover ad spend and overhead.
- Unit Cost
- $40.00
- Target Margin
- 60.00%
- Required Selling Price
- $100.00
- Gross Profit
- $60.00
- Profit Margin
- 60.00%
- Markup
- 150.00%
- Decimal Margin = 60 ÷ 100 = 0.60
- Divisor = 1 - 0.60 = 0.40
- Selling Price = $40.00 ÷ 0.40 = $100.00
- Gross Profit = $100.00 - $40.00 = $60.00
- Resulting Markup = ($60.00 ÷ $40.00) × 100 = 150.00%
Takeaway: To earn a 60% margin on a $40 product, you must price it at $100. Simply adding 60% ($24) to the cost gives $64, which only achieves a 37.5% margin.
Methodology & Assumptions
Underlying definitions and operational accounting principles.
- Cost Basis
- Refers to total landed unit variable costs (materials, manufacturing, and inbound freight).
- Pre-Tax Retail Price
- Calculations assume pre-tax prices. Sales taxes or VAT should be added after determining the baseline selling price.
- Margin vs Markup Difference
- A 60% target margin requires a 150% markup. Margin is percentage of revenue, markup is percentage of cost.
Frequently Asked Questions
Practical answers regarding margins, markups, and pricing strategy.
How do you calculate selling price from cost and margin?
Divide unit cost by (1 minus the target margin percentage expressed as a decimal). For example, with a $40 cost and 60% target margin: $40 ÷ (1 - 0.60) = $40 ÷ 0.40 = $100.
Why is selling price from margin different from markup?
Margin is calculated against the selling price (the larger number), whereas markup is calculated against cost (the smaller number). As a result, calculating price using a target margin produces a higher selling price than adding that same percentage as markup.
Can target margin be 100%?
No. A 100% margin requires zero cost or an infinite selling price. In commercial pricing, margins must be strictly less than 100%.
When should I use markup instead of margin?
Markup is commonly used in cost-plus industries like wholesale distribution, contracting, and manufacturing where you apply a standard multiplier to supplier prices. Margin is preferred in retail, ecommerce, and financial analysis where revenue is the primary benchmark.
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