Profit margin and target-price calculator
Compute margin and the price needed for a target margin.
Your inputs
Your results
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How it works
Calculate the share of your current selling price remaining after the unit cost you enter, then solve for the price needed to achieve a target margin. This makes the cost assumptions visible before you choose a price.
A few things to know
The result is a margin on the entered cost scope, not automatically accounting net profit. Assumes unit cost stays constant when price changes. Percentage fees should be modeled separately because they change with selling price. No taxes, demand forecast or currency conversion. A 100% target cannot be solved with a positive cost. Displays are rounded; calculations use unrounded numbers.
Results use your inputs. Keep all money amounts in the same currency.
When to use this tool
A selling price can look generous beside your supplier invoice and still leave too little money after packaging, delivery and other costs. This profit margin and target-price calculator puts your chosen cost scope beside your current price, then works backward from the margin you want. Use the result as a pricing scenario you can explain, rather than as a promise about demand or final accounting profit.
- Check how much of a current product price remains after the unit costs you have included.
- Find a candidate selling price when a supplier quote increases and you want to preserve a target margin.
- Compare two cost scenarios before deciding whether a lower-cost product variant deserves a different price.
How to use profit margin and target-price calculator
Choose your cost scope
Enter cost per unit. Product cost alone gives a gross-style margin; adding packaging and other relevant unit expenses creates a broader pricing model. Keep a written list so comparisons use the same scope.
Enter the actual selling price
Use the price after ordinary discounts, excluding taxes collected for remittance. The current margin uses this price as its denominator, so a list price customers rarely pay can overstate the result.
Set a realistic target
Enter a target margin below 100%. Review the target price, then check market demand, price-dependent fees and the effect of any planned promotion before adopting it.
Recovering a 40% modeled margin
Inputs
Cost per unit 60; current price 100; target margin 40%.
Result
Profit per unit is 40.00, current margin is 40%, and the target price is 100.00.
What it means
Dividing 60 by 0.60 gives 100. If the same cost rises to 72, a 40% target requires a price of 120.00 before additional price-dependent expenses.
Common mistakes to avoid
Calling every result net profit
The calculator subtracts only the cost you enter. Rent, payroll, interest and income taxes can remain outside that amount. Label the result according to your cost scope.
Treating percentage fees as a constant
A payment fee calculated on selling price changes when the target price changes. Use the payment or contribution calculators to check that effect instead of reusing an old fee amount.
Rounding before calculating
Keep full values while evaluating a scenario. Displayed amounts are rounded to two decimals, and your final retail price can move the achieved margin slightly above or below the target.
Frequently asked questions
Definitions, edge cases, and practical next steps for this tool. Search all tool FAQs ↗
How is profit margin calculated here?
The calculator subtracts entered unit cost from the selling price and divides that difference by the selling price. At a price of 100 and cost of 60, the profit amount is 40 and the margin is 40%. The meaning depends on which costs you included.
How do I calculate a price from a target margin?
Divide unit cost by one minus the target margin as a decimal. A cost of 60 and a 40% target give 60 divided by 0.60, or 100. Adding 40% to cost instead produces a markup calculation and a lower margin.
Why can my current margin be negative?
A negative margin means the current price is below the entered cost. The tool keeps that loss visible. Check discounts, incorrect currency units and duplicated costs first; if the inputs are right, changing volume alone will not repair this per-unit loss.
What happens if I enter a zero cost?
With a positive selling price and no modeled cost, current margin is 100%. The algebraic target price becomes zero, where margin itself is undefined. That zero is a warning that your selected cost model cannot identify a meaningful positive target price.
Why is a 100% target rejected?
A 100% margin would leave no share of the price to cover a positive cost. The target-price denominator becomes zero, so no finite price solves it. Choose a target below 100% and check that your cost estimate is complete.
Should customer acquisition cost be included?
Include a defensible per-unit acquisition allocation if you want a pricing scenario after that expense. Keep it separate in your records because acquisition cost can vary by channel and order size. A product-cost-only margin answers a narrower accounting question.
Does the target price include tax?
The model uses the price you enter and does not calculate tax. For a price excluding pass-through tax, add the relevant tax separately when preparing an actual customer quote. Tax-inclusive pricing needs a consistent cost and revenue treatment outside this simple model.
What should I do after finding a target price?
Test the price against customer expectations, competing offers and your contribution after fees. Then model an ordinary discount or returns scenario. A target margin is a useful constraint, but it does not demonstrate that the expected number of customers will buy.
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Sources and method
Use the references below to check definitions and platform guidance. The model’s scope and limits are explained above. Read our editorial standards.