Short answer: If a product costs you $12,00 and you want a margin of 30,0% on the price, you should sell it for $17,14. You would earn $5,14 per unit.
The preloaded values are an example: replace them with your own figures.
Suggested sale price
With these figures, if a product costs you $12,00 and you want a margin of 30,0% on the price, you should sell it for $17,14. You would earn $5,14 per unit.
Price based on the desired margin
| Margin on price | Price before tax | Equivalent markup | Profit per unit |
|---|---|---|---|
| 10% | $13,33 | 11,1% | $1,33 |
| 20% | $15,00 | 25,0% | $3,00 |
| 30% | $17,14 | 42,9% | $5,14 |
| 40% | $20,00 | 66,7% | $8,00 |
| 50% | $24,00 | 100,0% | $12,00 |
Results are for reference only and are not actual figures. Values depend on the country, the financial institution, taxes and current laws, and must be validated with an authorized financial institution. Banco.guru is an educational guide to what can be achieved; it does not offer products or personalized financial advice.
Tips for using this result
- Margin and markup are not the same: a 30% markup is not a 30% margin.
- Check that the price also covers your fixed costs with the break-even point.
- Compare with market prices before deciding.
- Tax is collected on behalf of the government: it is not profit.
What is the difference between margin and markup?
The margin is measured on the sale price: margin = (price − cost) ÷ price. The markup is measured on the cost: markup = (price − cost) ÷ cost. That is why, for the same product, the markup is always higher than the margin.
What are the formulas?
- With a desired margin: price = cost ÷ (1 − margin).
- With a desired markup: price = cost × (1 + markup).
- Price with tax: price × (1 + rate).
Example: a cost of $12 with a 30% margin gives a price of $17.14 (profit $5.14). With a 30% markup the price would be $15.60.
What else should you consider?
The price must cover variable costs, fixed expenses and taxes and leave a profit. Use the break-even calculator to know how much to sell. Tax rules depend on each country; consult an accountant.
Frequently asked questions
What is a good margin?
It depends on the industry, costs and competition. There is no universal number.
Is VAT part of my margin?
No. The VAT you charge is declared and paid to the government according to your country’s rules.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup equals a 33.3% margin.
Do I include fixed expenses in the unit cost?
This tool uses direct cost. Fixed expenses are covered with volume; review them with the break-even point.
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