Selling Price from Margin Calculator
When you know what an item costs you and the gross margin you need to keep, this calculator works backward to the price you must charge. It is the right tool when margin, not markup, drives your pricing, which is the case for most retailers, agencies and service businesses that budget profit as a share of revenue. The key insight is that margin is measured against the selling price, so you cannot simply add the margin percentage to the cost. Instead you divide the cost by one minus the margin: a 60 dollar cost at a 40 percent target margin needs a 100 dollar price, because the cost has to fall to 60 percent of the final figure. The results panel shows the required selling price, the dollar markup it represents, and the equivalent markup percentage so you can see how a margin target translates into the larger markup number people often quote. Use it to set list prices, build quotes or check that a discount still leaves the margin you planned. Every figure is computed deterministically from the formula shown below, with a worked example that reconciles exactly to the calculator defaults so you can trust the price before you publish it.
To hit a target margin, divide cost by one minus the margin: price = cost / (1 - margin). A $60.00 cost at a 40% target margin needs a selling price of $100.00, a markup of $40.00 (66.67%).
Selling price from margin formula
Selling price = Cost / (1 - Margin)
Margin = target gross margin (as a decimal)
Markup amount = Selling price - Cost
Markup on cost = Markup amount / Cost
Margin is measured against the price, so the cost must equal (1 minus margin) of the price. Rearranging gives price equals cost divided by (1 minus margin). The same dollar of profit looks bigger as a markup because markup is measured against the smaller cost.
Worked example
A wholesaler buys a unit for 60 dollars and wants a 40 percent gross margin.
- 1 - margin = 1 - 0.40 = 0.60
- Selling price = 60 / 0.60 = 100.00
- Markup amount = 100.00 - 60.00 = 40.00
- Markup on cost = 40.00 / 60.00 = 0.6667 = 66.67%
The required price is 100.00 dollars, a 40% margin and a 66.67% markup. These are the calculator's default inputs, so the result above matches the widget exactly.
Margin to markup, at a 60 dollar cost
A target margin always implies a higher markup percentage on cost.
| Target margin | Selling price | Markup on cost |
|---|---|---|
| 20% | $75.00 | 25.00% |
| 30% | $85.71 | 42.86% |
| 40% | $100.00 | 66.67% |
| 50% | $120.00 | 100.00% |
Pricing and margin basics: US Securities and Exchange Commission, Investor.gov.
Selling price from margin calculator: frequently asked questions
How do I price from a target margin?
Divide the cost by one minus the margin written as a decimal. If a product costs 60 dollars and you want a 40 percent gross margin, divide 60 by 0.60 to get a 100 dollar price. The reason you cannot simply add 40 percent to the cost is that margin is measured against the selling price, not the cost, so the cost must shrink to 60 percent of the final price.
Why is margin not the same as markup?
Margin is profit as a share of the selling price, while markup is profit as a share of cost. A 40 percent margin is a larger percentage when expressed as markup, because the base is the smaller cost figure. In this example, a 40 percent margin equals a 66.67 percent markup. Mixing the two is the most common pricing mistake, so this calculator reports both.
What margin should I target?
There is no universal answer. Margins vary widely by industry, from low single digits in grocery to well over half in software and luxury goods. Set a margin that covers all your operating costs, taxes and a reasonable profit after the cost of goods, then test it against what your market will pay. This tool leaves the margin fully editable.
Can the margin be 100 percent?
No. As the target margin approaches 100 percent the required price rises toward infinity, because you would need an infinitely high price for the cost to be a vanishing share of it. A margin of exactly 100 percent is undefined. Keep the target below 100 percent for a finite, sensible price.
What is the selling price formula?
Selling price equals cost divided by (1 minus margin), where margin is the target gross margin written as a decimal. The markup amount is the price minus the cost, and the markup percent is the markup amount divided by the cost.
Official sources
- Pricing, margin and small-business money basics: US Securities and Exchange Commission, Investor.gov. As at 25 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 25 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.