Pricing & Markup Calculator
Start from the margin you need and work back to the price — the direction pricing decisions actually run.
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How it works
Pricing to a target margin is not the same as adding that percentage to cost. To earn a 40% margin you divide the cost by 0.6, giving a 66.7% markup. Adding 40% to cost instead earns you only 28.6% — a mistake that quietly costs businesses a third of their intended profit.
Payment fees deserve the same treatment. A 2.5% processing fee taken off the top has to be priced in the same way, by dividing rather than adding, or the fee eats into the margin you thought you had secured.
Price = cost ÷ (1 − target margin − fee rate)
- Target margin — the profit you want as a share of the final price
- Markup — the same profit expressed as a share of cost — always the larger figure
- Fee rate — payment processing or platform commission, charged on the price
Worked example
A product costing 600, targeting a 40% margin with a 2.5% payment fee and 18% tax
Inputs
Results
Adding 40% to cost would have priced this at 840 and delivered a 26% margin after fees — a 200 shortfall on every unit.
Frequently asked questions
Why divide rather than add the margin?
Because margin is measured against the selling price, which is the number you are trying to find. Adding the percentage to cost measures it against the wrong base and always undershoots the target.
Should platform commission be treated as a cost or a fee?
As a fee, because it is charged on the final price rather than fixed per unit. That distinction matters: a percentage fee has to be built into the divisor, not added to cost.
What margin should I target?
High enough that discounting, returns and unexpected costs do not push you below break-even. Work backwards from your fixed costs and expected volume rather than copying an industry figure.
Is my data sent anywhere?
No. The calculation runs entirely in your browser. Nothing you type is transmitted to us or stored.
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