Target Margin Pricing CalculatorFree online financial calculator — instant results, no sign-up
Find the selling price and equivalent markup for a desired gross margin.
Estimates only, based on the inputs and assumptions shown. This is not financial, investment, tax, or legal advice. Prices, rates and local rules may change; crypto scenarios do not predict returns. Confirm important decisions with a qualified professional.
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About the Target Margin Pricing Calculator
The Target Margin Pricing Calculator finds the selling price needed to achieve a desired gross margin from a known unit cost. It also converts that margin into the equivalent markup on cost, helping you distinguish the two pricing measures. With a unit cost of $60 and a target gross margin of 40%, the required selling price is $100.00 and the equivalent markup is 66.67%.
- Unit cost ($)
- The cost attributable to one unit sold, entered in dollars, with a default of $60.
- Target gross margin (%)
- The desired gross profit as a percentage of selling price, entered as a percent, with a default of 40%.
Formula and method
m = G / 100; P = C / (1 - m); U = ((P - C) / C) × 100 = (m / (1 - m)) × 100.
- CUnit cost in dollars.
- GTarget gross margin entered as a percentage.
- mTarget gross margin expressed as a decimal.
- PRequired selling price per unit in dollars.
- UEquivalent markup on unit cost, expressed as a percentage.
Convert the target margin to a decimal, then divide unit cost by one minus that margin. Compute markup by dividing the difference between selling price and cost by cost, then multiplying by 100. For the default inputs, m = 40 / 100 = 0.40 and P = 60 / (1 - 0.40) = $100.00. The equivalent markup is ((100 - 60) / 60) × 100 = 66.67%, rounded to two decimal places.
Worked example
These are the calculator's starting values and the results it actually produces for them.
Inputs
- Unit cost60 $
- Target gross margin40 %
Results
- Required selling price$100.00
- Equivalent markup66.67%
How to use the Target Margin Pricing Calculator
- 1Enter the unit cost in dollars; the default is $60.
- 2Enter the target gross margin as a percentage; the default is 40%.
- 3Use a positive unit cost and a target margin below 100%; for ordinary profitable pricing, use a margin of at least 0%.
- 4Read the required selling price: the default inputs produce $100.00 per unit.
- 5Read the equivalent markup: the default inputs produce 66.67% on cost, not a 66.67% gross margin.
Reading your result
Required selling price is the per-unit revenue needed to meet the target gross margin using the entered cost. At $100.00 revenue and $60 cost, gross profit is $40 per unit, or 40% of revenue. Equivalent markup expresses that same $40 gross profit relative to the $60 cost, giving 66.67%.
Limitations
This is a cost-based pricing calculation, not a forecast of demand or a guarantee of profitability. It assumes a constant unit cost and that the calculated selling price is realized before any unmodeled discounts, returns, or fees. Gross margin is not net profit margin: operating expenses, financing costs, and taxes are not automatically included. Percentage-based selling fees require separate treatment if they are not already reflected in the pricing model. A 100% margin has no finite selling price for positive cost, and markup is undefined when unit cost is zero. Rounding the selling price to cents can slightly change the achieved margin.
Common questions
Why does a 40% gross margin require a 66.67% markup?+
Gross margin divides gross profit by selling price, while markup divides gross profit by cost. With the default inputs, the $40 gross profit is 40% of the $100.00 selling price but 66.67% of the $60 cost.
Why does the calculator divide cost by one minus the target margin?+
If gross profit must be 40% of selling price, cost must account for the remaining 60%. Dividing the $60 cost by 0.60 therefore gives the required selling price of $100.00.
What costs should I include in unit cost?+
Use the per-unit costs included in your business's cost of goods sold, such as purchase or production costs and applicable freight. Keep the cost basis consistent with your gross-margin reporting; adding overhead changes what the resulting margin represents.
Will a discount from the required selling price preserve my target margin?+
No. If cost stays at $60, reducing the realized selling price below $100.00 lowers gross margin below the 40% target. The displayed target applies to the revenue actually received per unit, not merely the listed price.
Does the calculator save my information?+
Calculations run in your browser. While signed in, inputs and results are automatically recorded in account history; saving a result creates a separate saved record.
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Results are estimates for informational purposes and are not financial, medical or legal advice.