Formula
A target margin is a share of the price, so the price divides cost by what remains:
Selling price = cost / (1 − target margin)
A 40% margin is not a 40% markup. Markup multiplies the cost. This page divides.
Assumptions
- The margin is a percent of the selling price.
- The target is below 100%, because a 100% margin would leave no cost.
Worked example
A $30.00 cost and a 40% target margin set a selling price of $50.00.
Input definitions
- Cost
- The amount that remains after the margin is taken from the price.
- Target profit margin
- The percent of the selling price you want to keep, from 0 to 99.
Limitations
This is a planning estimate, not accounting, tax, payroll, or advertising advice. The currency control changes the symbol only.
Questions
Why is a 40% margin not cost times 1.40?
That multiplication is a markup. A 40% margin on the price needs a higher price, cost divided by 0.60.
Does this add a marketplace fee?
No. The ecommerce profit calculator subtracts a fee from a price you already set.