Margin calculator
Find the selling price that delivers a target gross margin on a given cost. It uses margin as a share of the selling price, which is how most businesses judge profitability.
Enter a cost and a margin below 100%.
How it works
- Price = cost ÷ (1 − target margin)
- Profit = price − cost
Worked example. A cost of 100 with a 40% target margin gives a price of 166.67 and a profit of 66.67. Adding 40% to the cost would give only 140, a 28.57% margin.
Common questions
Why divide by (1 − margin) instead of multiplying?
Because margin is measured against the selling price, not the cost. Multiplying cost by 1.4 gives a 28.57% margin, not 40%.
Can I target a 100% margin?
No. A margin of 100% or more would need a price of infinity for any cost above zero, so the calculator rejects it.
Does gross margin include overheads?
No. Gross margin considers direct costs only. Overheads are paid out of it.