Margin Calculator

The margin calculator helps you set a selling price that hits the profit margin you are aiming for. You enter the cost of the item and the gross margin percentage you want, and the tool returns the selling price, the profit per unit, and the equivalent markup percentage. Margin is profit measured against the selling price, so a 40 percent margin means 40 cents of every sales dollar is profit after the cost of the item. Because the price you need depends on the margin you want, the formula divides the cost by one minus the margin, which gives a higher price than simply adding the margin percentage to the cost. The tool also shows markup, which is profit measured against the cost rather than the price, because the two are often confused and the same profit gives a higher markup percentage than margin percentage. A New Zealand retailer, wholesaler, tradesperson, or maker can use it to price products consistently and to make sure every sale leaves enough room above cost. To price well, make sure your cost figure includes everything that goes into the item, such as freight and packaging, not just the supplier price, otherwise your real margin will be lower than planned. Set your target margin with overheads and discounting in mind, since the gross margin still has to cover rent, wages, and the occasional sale. Review your pricing as costs change so margins do not quietly erode. All figures are in New Zealand dollars and the result is an estimate to guide pricing, not a substitute for advice from your accountant.

Price = cost / (1 - margin). Markup = (price - cost) / cost. Estimate only, not financial or tax advice.