Pricing Calculator
Calculate selling price from cost and desired margin, or find your margin from selling price and cost. Two modes in one tool.
What is Pricing Calculator?
A pricing calculator helps you determine the optimal selling price for products or services by working from either cost-plus (desired margin) or market-backward (competitive price) approaches. Enter your cost and desired margin to find the required selling price, or enter selling price and cost to calculate your actual margin. It also handles markup (cost-based percentage) vs margin (revenue-based percentage) — a critical distinction that many businesses confuse, leading to underpricing.
How It Works
For cost-plus pricing: enter cost and desired margin percentage. Selling price = cost / (1 - margin/100). For margin calculation: enter cost and selling price. Margin = (price - cost) / price × 100. The tool clearly distinguishes between margin and markup: a 50% margin requires a 100% markup (selling at 2× cost), while a 50% markup results in only a 33% margin. It shows both figures and the profit amount so you can communicate pricing in whichever terms your stakeholders prefer.
Common Use Cases
- •Setting product prices that achieve target profit margins for sustainable business operations
- •Converting between markup percentage (used in purchasing) and margin percentage (used in finance)
- •Calculating the selling price needed to cover all costs plus desired profit percentage
- •Evaluating whether competitor prices are viable given your cost structure and margin requirements
- •Determining maximum acceptable cost for a product given a market-driven selling price
- •Modeling price sensitivity — how price changes affect margin and volume break-even
Frequently Asked Questions
What's the difference between margin and markup?▼
Margin is profit/price, markup is profit/cost. A 50% margin equals a 100% markup.
Should I price on cost or on value?▼
Cost-plus pricing guarantees a margin but ignores what the customer will actually pay, frequently leaving money on the table for something highly valuable and overpricing something commoditised. Value-based pricing starts from the outcome delivered. Use cost as your floor, not your method.
How do I work out the price for a target margin?▼
Price equals cost divided by (1 − target margin). A £30 cost at a 60% target margin gives 30 ÷ 0.40 = £75. Note this is not the same as adding 60% to the cost, which would give £48 and a 37.5% margin.
What is psychological pricing and does it work?▼
Setting a price just below a round number, such as £9.99 instead of £10, exploits left-digit bias, and the effect is well documented in consumer retail. It works less well, and can undermine credibility, in premium and business-to-business contexts where round numbers signal confidence.
How should I handle a price increase for existing customers?▼
Give clear advance notice, explain what has changed, and consider grandfathering existing customers for a period. Unannounced increases cost more in churn and goodwill than the additional revenue usually recovers.
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