Selling Price by Profit Margin
Estimate a selling price using total cost and a target gross margin.
Tool Operation Area
Compare markup with margin, including a sales fee charged as a percentage of the selling price. Do not include the same percentage fee in cost again.
Worked Example
Total item cost excluding percentage sales fee: 80 currency; Target profit margin on selling price: 20 %; Sales fee on selling price: 0 %; Alternative markup on cost: 25 %.
Price for target margin: 100.00 currency; Sales fee at that price: 0.00; Profit at target price: 20.00; Alternative markup price (before percentage fee): 100.00.
How It Works
- Price = cost / (1 - margin/100 - percentage fee/100).
- Profit = selling price - percentage sales fee - cost. Alternative markup price = cost × (1 + markup/100).
price - fee - cost = profit
How to Use
- 1Calculate the full item cost first.
- 2Enter margin and sales fee separately. Their sum must be below 100%.
- 3Compare the resulting price with the alternative markup calculation.
FAQ
Why is 25% margin different from 25% markup?
On cost 80 with zero fee, 25% markup gives 100; 25% margin requires 106.67.
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