Margin Calculator
Price a product from its cost and a target profit margin — the correct way to hit a margin, not a markup.
How it works
Price = cost ÷ (1 − margin%) · Profit = price − cost
To reach a target margin you divide the cost by (1 − margin), because margin is measured against the final price, not the cost. Multiplying the cost by (1 + margin) is the classic error — that produces a markup, which always lands below the intended margin. As the desired margin nears 100% the required price rises steeply, which is why it can never reach 100% exactly.
Worked example
To keep a 40% margin on a $60 item, price it at 60 ÷ (1 − 0.40) = $100, for a $40 profit. Note that $40 on a $60 cost is a 66.7% markup — the same sale, a different base.
Frequently asked questions
How do I set a price from a target margin?
Divide the cost by (1 − margin). For a 40% margin on a $60 cost: 60 ÷ 0.60 = $100. Do not multiply the cost by 1.40 — that gives a 40% markup, which is only a 28.6% margin.
Why can’t margin reach 100%?
A 100% margin would mean the cost is zero, so the required price is infinite. As the desired margin approaches 100%, the price climbs steeply — that is why this calculator caps it below 100%.
Should I price on margin or markup?
Retailers often think in markup because it starts from cost, but margin is what shows up on the income statement. Pricing to a margin target keeps your profitability predictable.
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Educational estimate, not financial advice.