How does a markup calculator differ from this one?

A markup calculator starts from the cost and adds a percentage of that cost. This one starts from the margin you want on the selling price and divides by (1 − margin). The two produce different prices from the same percentage: a 50 % markup on $50 gives $75, a 50 % margin gives $100. This calculator shows the equivalent markup alongside the price, so you can quote either.

What is the markup formula?

Markup % = (selling price − cost) ÷ cost × 100. To convert between the two measures: markup = margin ÷ (1 − margin), and margin = markup ÷ (1 + markup). So a 40 % margin is a 66.7 % markup, and a 40 % markup is a 28.6 % margin. Markup is always the larger of the two numbers, which is why it is the one that flatters a quote.

What is the difference between the net and gross selling price?

The net price excludes sales tax, and it is the figure margin and gross profit refer to. The gross price is what the customer pays: net × (1 + tax rate). Tax is a pass-through item — it never belongs in a margin calculation, because you collect it on behalf of the tax authority rather than earning it.

How does the selling price set my advertising budget?

Gross profit — selling price minus unit cost — is what one sale contributes to advertising and fixed costs, which makes it the most you can pay to acquire that sale. The margin also fixes your break even ROAS at 1 ÷ margin: at a 50 % margin a campaign must return 2x before it stops losing money, at 25 % it must return 4x.

Reverse Margin Calculator

Which price does your target margin actually require? Enter unit cost and the margin you want, and get the price, the gross profit it leaves, the break even ROAS and the markup it corresponds to.

Cost per unit ($) Purchase price plus every variable cost per unit

Target margin (%)

The gross margin you want to achieve on the selling price. The calculator works backwards to the price that delivers it.

Net selling price

—

cost ÷ (1 − target margin)

Gross profit / max CPA

—

Your ceiling on ad spend per sale

Break even ROAS

—

1 ÷ target margin

Equivalent markup

—

The same price expressed on cost

Selling price by target margin

Net selling price Your target margin

The price a high target margin demands climbs disproportionately: because you divide by (1 − margin), the curve is a hyperbola — between 80 % and 90 % target margin the price very nearly doubles.

Sales tax / VAT (%) (optional) Your local rate — for the gross price Planned units / month (optional) For the total gross profit

Cost plus pricing: working backwards from the margin you need

Most pricing tools check a price you already have. This one runs the calculation the other way: you state the unit cost and the margin you want, and it returns the price that delivers it. That is cost plus pricing in its useful form — not «cost times some number», but cost divided by what is left after the margin. The distinction from measuring an existing price matters, because the two directions do not use the same arithmetic, and mixing them up is where most margin shortfalls begin.

The selling price formula, and why you divide instead of adding

SELLING PRICE = COST ÷ (1 − TARGET MARGIN)

The margin goes in as a decimal (50 % = 0.5). The reason for dividing is that a margin is measured against the price, not against the cost — so the price is the unknown on both sides of the relationship, and only division isolates it. Add 50 % to a $50 cost and you get $75, which is a 33.3 % margin. Divide by 0.5 and you get $100, which is the 50 % you asked for.

How to calculate selling price from cost and target margin

A unit costs $50, the target margin is 50 %, sales tax is 19 %:

Cost per unit$50.00

Target margin50 %

Net price = 50 ÷ (1 − 0.5) = $100.00

Gross price (× 1.19, at a 19 % rate) $119.00

Gross profit / max CPA $50.00

Break even ROAS (1 ÷ 0.5) 2.0x

Target margin, markup percentage and the price each one demands

At a constant unit cost of $50, with the equivalent markup alongside:

30 % margin = 43 % markup $71.43

50 % margin = 100 % markup $100.00

70 % margin = 233 % markup $166.67

Markup vs margin: why 50 % markup is only a 33 % margin

The two are measured against different bases, and that is the whole confusion: markup divides the profit by the cost, margin divides it by the price. A 50 % target margin is a 100 % markup on cost; a 50 % markup is only a 33.3 % margin. The conversion runs markup = margin ÷ (1 − margin) in one direction and margin = markup ÷ (1 + markup) in the other, which is what the equivalent-markup card above computes. It matters beyond arithmetic: suppliers and retail buyers usually quote markup, while your accounting and every advertising ceiling on this site are built on margin. Quote one while planning with the other and you will price a whole range too low without a single mistake in the spreadsheet.

How to price a product without giving the margin away

Put every variable cost into the unit cost: not just the purchase price — shipping, packaging, payment and marketplace fees, and your returns rate all belong in front of the margin. Leave them out and the price you calculate protects a margin you never actually earn.
Treat the result as a floor, not an answer: the calculation gives you the lowest price that meets your margin. What the market will pay is a separate question, and if the calculated price sits above it, the target margin is the thing that has to move.
Never let tax eat the margin: sales tax and VAT are pass-through items and do not belong in the margin calculation. Margin and gross profit always refer to the net price — the gross figure is what the customer pays, not what you keep.

Frequently asked questions

How does a markup calculator differ from this one?: A markup calculator starts from the cost and adds a percentage of that cost. This one starts from the margin you want on the selling price and divides by (1 − margin). The two produce different prices from the same percentage: a 50 % markup on $50 gives $75, a 50 % margin gives $100. This calculator shows the equivalent markup alongside the price, so you can quote either.
What is the markup formula?: Markup % = (selling price − cost) ÷ cost × 100. To convert between the two measures: markup = margin ÷ (1 − margin), and margin = markup ÷ (1 + markup). So a 40 % margin is a 66.7 % markup, and a 40 % markup is a 28.6 % margin. Markup is always the larger of the two numbers, which is why it is the one that flatters a quote.
What is the difference between the net and gross selling price?: The net price excludes sales tax, and it is the figure margin and gross profit refer to. The gross price is what the customer pays: net × (1 + tax rate). Tax is a pass-through item — it never belongs in a margin calculation, because you collect it on behalf of the tax authority rather than earning it.
How does the selling price set my advertising budget?: Gross profit — selling price minus unit cost — is what one sale contributes to advertising and fixed costs, which makes it the most you can pay to acquire that sale. The margin also fixes your break even ROAS at 1 ÷ margin: at a 50 % margin a campaign must return 2x before it stops losing money, at 25 % it must return 4x.