A percentage attached to a price is incomplete until you know its denominator. A 30% markup and a 30% gross margin produce different selling prices from the same cost. This matters when a supplier, sales team and business owner use the word “margin” differently.

Open the margin and markup calculator and choose “Find price for target margin” to work backwards from your own cost.

A pricing example from both directions

Suppose a unit costs 70. Selling it at 100 leaves 30 gross profit. That profit is 30% of the selling price, but approximately 42.86% of the cost. A 30% markup on the same cost instead sets the price at 91, leaving 21 profit and approximately 23.08% gross margin.

Calculate a price for your target

For a target margin expressed as a decimal, divide cost by one minus the margin. At cost 70 and margin 0.30, the price is 70 ÷ 0.70 = 100. For target markup, multiply cost by one plus the markup. At 30% markup, the calculation is 70 × 1.30 = 91.

The calculator keeps the two modes separate and also displays a price rounded upward to cents. A 100% gross margin is not achievable with a positive cost and finite selling price; it is therefore rejected as a target.

Check your definition of cost

Use consistent amounts: one unit of product, one service package or one project. Do not compare an entire monthly expense with the price of a single item. Decide which direct costs belong to that unit and avoid mixing tax-inclusive selling prices with tax-exclusive costs.

These calculations do not automatically include rent, salaries, income taxes or finance costs. A healthy-looking gross margin can coexist with an overall loss. Use the break-even calculator to examine fixed-cost coverage separately.

Discounts change more than the price

In the first example, a 10% discount changes the price from 100 to 90 and profit from 30 to 20. Restoring the original total gross profit would require 1.5 times as many units, assuming costs do not change. That is an arithmetic requirement, not a prediction that demand will rise.

Test that situation with the discount impact calculator before accepting a percentage discount.

Reference

AccountingCoach explains the different denominators used for margin and markup. Our examples and calculator implementation are independent.

Published by AllMarkets. AI-assisted research and implementation; examples are illustrative. No professional financial review is claimed. Sources checked 14 October 2026.