Pricing is the fastest lever on profitability: a few percentage points of margin can outweigh a lot of extra sales. This calculator prices from the margin you need, so the price is derived from your business goals rather than a round number.
Margin-first pricing
Because margin is defined against the selling price, the formula runs backwards from cost: price = cost ÷ (1 − margin). It guarantees each sale yields the target profit — something fixed markups can't promise as costs fluctuate.
The price–volume trade-off
A higher price needs fewer sales to cover fixed costs, but may slow demand; a lower price sells more but erodes per-unit profit. Testing the monthly revenue figure against your costs shows whether the price is viable at realistic volumes.
When to revisit your price
Cost increases, competitor moves and changes in demand all shift the right price. Rather than reacting ad hoc, recompute from your target margin whenever inputs change, so the margin you intended is the margin you actually keep.
Frequently asked questions
Selling price = cost ÷ (1 − target margin). For a $40 cost and 40% margin, price = 40 ÷ 0.6 = $66.67.
Margin-based pricing sets price so profit equals a target share of the price. Markup adds a percentage to cost. They produce different prices for the same percentages.
It depends on your industry and overheads. A target margin must cover indirect costs and leave profit; many product businesses aim for 30–50% gross margin.