How to price from a target margin
Divide total cost by one minus the margin.
Add all unit costs
Include product cost plus per-unit shipping and fees.
Choose a margin
Use a gross margin that covers overhead and profit.
Check markup
Markup will be higher than margin; use it when negotiating with suppliers.
What does this tool do?
Pricing from a target margin means dividing total unit cost by one minus the margin. It ensures the margin is measured on the selling price rather than added to cost, which is the difference between margin and markup.
The Formula
Price = (Unit cost + Extra cost) ÷ (1 − Target margin %)Frequently Asked Questions
Why not just add the margin percentage to cost?
Adding margin to cost produces a lower price than intended because the margin is then measured against price. Dividing cost by one minus margin gives the correct selling price.
Should shipping be in unit cost?
Include any cost incurred per unit, including inbound freight and outbound shipping you absorb. Marketplace commissions can be treated as a percentage fee separately.