Price for Target Margin Calculator
What selling price gives my chosen margin on an entered cost basis? Check the formula, a worked example and the stated measurement limits.
Result for the values shown.
Calculations run in your browser.
What to enter
| Input | Meaning and units |
|---|---|
| Cost basis per unit (currency/unit) | Enter cost basis per unit in currency/unit. Use the measurement basis described below. |
| Target margin on selling price (%) | Enter percentage units: 80 means 80%, not 0.8. |
Understanding your result
Check the modeled price against demand and competitive positioning separately. Use the formula to explore cost changes under the same target convention.
Common mistakes
- Adding 40% to cost is a 40% markup, not a 40% sales-price margin.
- Rounding a price down can reduce the achieved margin.
- Mixing annual and monthly periods, or leaving out a cost that the model does not include.
Check your calculation
- Compare a simple one-period or zero-change case with hand arithmetic before applying a longer scenario.
Choose a consistent measurement basis
Define the cost basis explicitly. Product cost, total variable cost and fully allocated cost produce different meanings for the resulting margin.
A second independently worked case
A zero margin target gives a price equal to the entered cost basis. Inputs: Cost basis per unit: 30 currency/unit; Target margin on selling price: 0 %. Results: Modeled selling price: 30 currency/unit; Price less entered cost: 0 currency/unit.
Precision and output units
Displayed results: Modeled selling price in currency/unit, rounded to 2 decimal places; Price less entered cost in currency/unit, rounded to 2 decimal places. Display rounding does not establish the precision of the original measurements or estimates.
Calculation checks, sources and review limits
What selling price gives my chosen margin on an entered cost basis?
What selling price gives my chosen margin on an entered cost basis? Check the formula, a worked example and the stated measurement limits.
Common uses
- What selling price gives my chosen margin on an entered cost basis
- Compare Price for Target Margin across scenarios under matching definitions.
How it works
Divide the entered unit cost by one minus target margin as a fraction. A target margin is a share of selling price; it differs from a markup applied to cost.
Worked example
30 ÷ (1 − 0.40) = 50; the difference is 20, or 40% of 50. Enter cost basis per unit 30 currency/unit, target margin on selling price 40 %. The independently worked result is modeled selling price 50 currency/unit; price less entered cost 20 currency/unit. Compare this example with your reporting definitions before substituting your own figures.
FAQ
Is a 40% markup the same as a 40% margin?
No. Adding 40% to a cost of 30 gives a price of 42 and a sales-price margin of 12 ÷ 42, about 28.57%. A 40% margin on that cost requires a price of 50.
Can the formula determine a market-clearing price?
No. It only solves the entered cost-and-margin relationship. Demand, product positioning, competitors and customers’ willingness to pay require separate evidence.