Pricing & Profit
Selling Price Calculator
Calculate the selling price you need to charge to reach a target profit margin from a known cost.
Enter your cost and the profit margin you want to keep, and the calculator returns the price that produces it.
Enter your values
Total cost of one product or service that the price must recover.
Profit you want to keep as a percentage of selling price. Must be below 100%.
Results
Recommended selling price
—
Enter your cost and target profit margin.
Expected profit
—
Selling price less cost.
Equivalent markup
—
Profit expressed as a percentage of cost.
Results are estimates based on the values entered and are provided for general planning.
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Step by step
How to use the selling price
- Enter the Cost of one unit — everything the selling price must recover.
- Enter the Target profit margin you want as a percentage of the selling price.
- Read the recommended selling price, the profit per sale, and the equivalent markup on cost.
Method
How to calculate selling price
Profit margin divides profit by selling price, so the price cannot be found by adding the margin percentage to cost. Instead, the cost represents the share of price that is not margin — that share is (1 − target margin). Dividing cost by that share returns the price at which the remaining share equals the target margin.
Formula
Selling price = Cost ÷ (1 − Target margin ÷ 100) Expected profit = Selling price − Cost Markup = Profit ÷ Cost × 100
Assumptions
- Target margin is measured against selling price, not cost.
- Target margin must be below 100% because a 100% margin leaves no room for a positive cost.
- Cost includes every per-sale cost the price is meant to recover.
- Tax, discounts, refunds, and marketplace fees are excluded unless already inside the cost figure.
Price, profit, and markup are calculated at full precision before display. Currency displays two decimals; percentages display two decimals.
How to interpret the result
The result is the undiscounted price that produces the entered margin under the entered cost. If you later discount the price, absorb fees, or your cost rises, the realised margin falls below the target and the price needs recalculating.
Worked example: pricing a handmade candle
A candle uses $3.20 of wax, $2.80 for the wick and jar, and $4.00 of labour, for a total cost of $10.00. At a 55% target margin, the selling price is $10.00 ÷ (1 − 0.55) = $22.22. Expected profit is $12.22, which is a 122.2% markup on cost.
When to use it: updating a price list after cost increases
When costs rise, re-enter the new cost at the same target margin instead of adding the increase to the old price. If the candle's cost rises to $11.00, the price for a 55% margin becomes $11.00 ÷ 0.45 = $24.44, not $23.22.
Target margin vs markup
Both percentages describe the same gross profit but divide it by different numbers. Markup divides profit by cost; margin divides profit by selling price. Because selling price is larger than cost on a profitable sale, the margin percentage is always smaller than the markup percentage.
Confusing the two is one of the most common pricing errors. A business that wants a 40% margin but applies a 40% markup underprices every unit, and the gap widens as margins get higher.
Why margin and markup produce different prices
Take a $60 cost. A 40% markup adds $24, producing an $84 price and a 28.6% margin. A 40% target margin instead produces a $100 price and a 66.67% markup. Same cost, same intent, $16 difference per unit.
Use margin when you are planning how much of your revenue you keep, and markup when you are applying a consistent rule on top of a known cost. Whichever you choose, keep one convention across the catalogue so prices stay comparable.
Target margin and markup compared
The same $40 profit on a $60 cost and $100 price reads differently depending on the denominator.
| Measure | Formula | What it shows |
|---|---|---|
| Target profit margin | Profit ÷ Selling price × 100 | 40% — the share of the price you keep. |
| Markup | Profit ÷ Cost × 100 | 66.67% — how much was added on top of cost. |
| Selling price | Cost ÷ (1 − Target margin) | $100.00 — the price that delivers the target margin. |
Frequently asked questions
Which calculator do you need?
- Want to check the margin this price produces? Verify it with the Profit Margin Calculator.
- Prefer to think in markup on cost rather than margin? Use the Markup Calculator.
- Need the contribution each unit makes toward fixed costs? Try the Contribution Margin Calculator.
Keep calculating
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