Pricing Calculator

How to Use

Enter your cost per unit and a target percentage. "By Margin %" solves for the price where profit is that percentage of the selling price (price = cost ÷ (1 - margin%)). "By Markup %" solves for the price where profit is that percentage of cost (price = cost × (1 + markup%)). Results update live as you type. Every calculation also shows the equivalent value in the other unit, so you can see both figures without switching modes or recalculating separately.

Solving Pricing Backward From a Target, Not Forward From a Guess

Most pricing conversations start with a target profitability goal already decided, "we need this line to hit a 25% margin," or "our standard trade markup is 40%," and the actual work is figuring out what price achieves that target given a known cost. This tool is built specifically for that backward direction: instead of picking a price and then checking what margin or markup it happens to produce, you state the target first and the calculator solves for the price that gets you there exactly. This is a genuinely different workflow than simply comparing margin and markup on an already-chosen price, it's meant to sit at the very start of a pricing decision, not the end of one.

Worked Example: The Same Cost, Two Different Targets

Using this tool's own defaults, a cost of 100 with a target margin of 20% in "By Margin %" mode. The price needed is 100 ÷ (1 − 0.20) = 125, profit per unit is 125 − 100 = 25, and that 25 profit works out to an equivalent markup of 25 ÷ 100 = 25%. Now switch to "By Markup %" mode and enter the same cost of 100 with a target markup of 20% instead. The price needed is only 100 × (1 + 0.20) = 120, noticeably lower than the margin-based 125, because a 20% markup target and a 20% margin target are not the same profitability goal despite sharing the same number, this side-by-side comparison makes that gap concrete rather than abstract.

Why the Same Percentage Number Produces Different Prices

The core reason margin-based and markup-based pricing diverge for an identical percentage input is what each one measures profit against. Margin measures profit as a share of the selling price you're solving for, markup measures profit as a share of the cost you already know. Since the selling price is always larger than cost in any profitable pricing scenario, hitting a margin target (measured against the larger number) requires a proportionally larger price than hitting the same percentage as a markup target (measured against the smaller, fixed cost figure). This is exactly why picking the correct mode for your actual target, not just any mode, matters before trusting the resulting price.

A Practical Note on Choosing the Right Mode

If a target profitability goal was communicated as "we want X% margin" or "X% of revenue," use "By Margin %" mode. If it was communicated as "add X% on top of cost" or "our standard markup is X%," use "By Markup %" mode. Using the wrong mode for the actual stated target produces a real pricing error, not just a rounding difference, as the worked example above shows, a 20% margin target and a 20% markup target on the identical 100 cost differ by 5 in the resulting price, which compounds into a meaningful revenue gap across an entire product line sold at volume.

Frequently Asked Questions

Why does margin-based pricing give a higher price than markup-based pricing?

For the same percentage number, margin-based pricing (price = cost ÷ (1 - margin%)) targets margin as a share of the selling price, while markup-based pricing (price = cost × (1 + markup%)) targets it as a share of cost. Since selling price is always higher than cost, a margin target needs a higher price to hit the same percentage.

Which pricing method should I use?

Use margin-based pricing if you're planning around a target percentage of revenue, common in retail and financial planning. Use markup-based pricing if you think in terms of a fixed percentage added to cost, common in wholesale and trade pricing.

Why is the target percentage field capped below 100% in margin mode?

Because a 100% margin target is mathematically impossible, the margin formula divides cost by (1 minus margin%), and dividing by zero (which happens at exactly 100%) is undefined. A margin approaching 100% would require an infinitely large selling price, since margin can never actually reach or exceed 100% of a positive selling price without profit exceeding the price itself, which isn't a coherent pricing scenario.

How is this different from the Markup Calculator?

The Markup Calculator solves specifically for markup and its equivalent margin from a cost and a markup percentage. This Pricing Calculator solves for the same underlying price, but lets you choose upfront whether your target percentage is a margin or a markup, and labels the output accordingly, useful when a target profitability goal is stated as a margin (common in financial planning and retail) rather than a markup (common in wholesale and trade pricing).

If I raise my cost, does the selling price increase by the same amount?

Not in margin mode. In markup mode, since price equals cost times a fixed multiplier, a cost increase does scale the price proportionally. In margin mode, price equals cost divided by a fixed factor less than 1, which also scales proportionally with cost, but by a larger multiplier than the markup would suggest, since margin-based pricing is designed to preserve a percentage of the selling price, not just add a fixed percentage on top of cost.

Should I price every product in my catalog to the same target margin?

Not necessarily. A uniform target margin is simple to apply, but many businesses deliberately vary target margins across products, higher margins on premium or low-competition items, thinner margins on price-sensitive or highly competitive items used to drive overall volume or foot traffic. Using this calculator per product with a different target percentage for each lets you apply a deliberate, varied pricing strategy rather than a single blanket rule across an entire catalog.