Product Pricing Calculator

Margin and markup measure profit against different bases. A 40% markup adds 40% of your cost on top of that cost, but a 40% margin means 40% of the final SELLING PRICE is profit -- which requires the price to rise by more than 40% over cost, since the cost now has to represent only 60% of a larger number. This calculator uses the margin definition (percentage of selling price) throughout, which is the convention most retailers and accountants use when discussing profit margins.

All three combine into Total Cost Per Unit before the margin formula is applied, and at typical default values their individual effects on the final price are similar in size rather than one clearly dominating. In practice, whichever cost component makes up the largest share of your total cost per unit will have the largest dollar impact on price, so it's worth tracking all three separately rather than assuming COGS alone determines your price.

Markup Percentage is your Gross Profit Per Unit divided by your Total Cost Per Unit, expressing profit as a percentage on top of cost. Actual Margin is that same Gross Profit Per Unit divided by the Recommended Retail Price instead, expressing profit as a percentage of what the customer pays. Because the price is always larger than the cost, markup percentage is always a bigger number than margin percentage for the same underlying profit dollars.

No -- this is a pure cost-plus pricing model that works backward from your costs and desired margin to a target price, with no awareness of competitor pricing, market demand, or what customers are actually willing to pay. Use the Recommended Retail Price as a profitability floor or reference point, then adjust it against competitive research and market testing before finalizing what you actually charge.