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Pricing and Margin Calculator

Most pricing mistakes come from marking up costs by a number that sounds right. This works the other way around: pick the margin you need, and it tells you the price that produces it.

$
%

Suggested price

$42

Profit per unit

$17

Equivalent markup

66.7%

Not the same number as margin. See below.

Margin and markup are different numbers, even from the same price. Margin is profit as a percentage of the price (what you're actually trying to hit). Markup is profit as a percentage of the cost. A 40% margin requires a bigger markup than 40%, and that gap gets wider the higher your margin target goes. If you've been pricing by "adding a markup," check the margin number above. It's probably lower than you assumed.

How to read this

Markup and margin are not the same thing, and confusing them is the most expensive arithmetic error in small business. A 50% markup on a $10 cost gives a $15 price, but that is a 33% margin, not 50%. To get a 50% margin you need to charge $20.

Margin is measured against the price; markup is measured against the cost. Because the denominators differ, the gap widens as the numbers grow, and a business that thinks in markup while budgeting in margin will consistently come up short.

Set the margin from what the business needs to survive (covering fixed costs and leaving profit) rather than from what competitors charge. Competitor pricing tells you what the market will bear, which is a ceiling, not a target.

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Common questions

What is the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. The same dollar profit produces a smaller margin than markup, always.
What margin should I aim for?
It varies widely by industry. Grocery runs on single digits, software on the high double digits. The more useful question is what margin covers your fixed costs at the volume you can realistically sell.
Should payment processing fees be part of the unit cost?
Yes. Anything charged per sale belongs in the variable cost, or your margin will be consistently overstated by a few points.

Do this for your own business

The Founder Workbook inside PushStartGo builds this from your own customer interviews and your own numbers, keeps it with the rest of your plan, and checks it for the vague phrases and made-up figures that sink most plans. Customer discovery, value proposition, and prototype testing are free with no card. Go-to-market, profit model, and pitch prep are part of Pro.

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