Price your product
The target margin is a percentage of the final selling price.
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Set a price that covers your cost and leaves the profit margin you target — the margin is a share of the final price, not of the cost.
How to price a product from a target margin
When the margin is a share of the selling price, you divide the cost by what is left after the margin.
The formula
- Suggested price = Cost ÷ (1 − Target margin ÷ 100)
- Profit per unit = Suggested price − Cost
- Check: Profit per unit ÷ Suggested price = Target margin
A cost of 50 with a 30% target margin gives 50 ÷ 0.7 = 71.43. Selling at 71.43 leaves 21.43 of profit, which is 30% of the price.
Margin-based pricing vs markup
Adding 30% to a cost of 50 gives 65 — that is a 30% markup, and it is only a 23.1% margin. Margin-based pricing starts from the margin and solves for the price, which is why the answer is 71.43 rather than 65.
Use this calculator when a target margin is the requirement, for example when a retailer expects a set percentage or when you are comparing products by margin. Use the profit margin calculator to check the margin you actually achieved after a sale.
What the price does not include
The result is a pre-tax selling price built from the cost you enter. Sales tax or VAT, payment processing fees, shipping, marketplace commission and returns are not added automatically — build them into the cost or add them after pricing.
Questions
Why is a 30% margin not cost × 1.3?
Because the margin is measured against the selling price, not the cost. Cost × 1.3 is a 30% markup, which produces a 23.1% margin. Margin-based pricing divides by 0.7 instead.
Can the target margin be 100%?
No. A 100% margin would mean the cost is zero, so the formula cannot produce a price. The calculator accepts margins below 100%.
Should VAT or sales tax be included in the cost?
Use the cost you actually recover per unit, typically excluding recoverable tax, then add tax to the final price. Mixing tax-inclusive costs with ex-tax prices overstates the margin.