Plan prices and costs around the margin you need

A target margin turns a profitability goal into a concrete operating decision. This calculator works backwards from your desired profit margin to show the selling price a unit needs, the maximum unit cost a price can support, or the revenue and whole-unit sales volume required for a profit target.

It also compares the result with margins five percentage points below and above your target, within the supported range. That makes the trade-off between margin, price and allowable cost easier to see before you commit to a pricing change.

What the calculator can solve

Choose the mode that matches the decision in front of you:

• Selling price uses unit cost and target margin to calculate the required price. Planned sales volume then shows total revenue and profit.
• Allowable cost uses selling price and target margin to calculate the highest unit cost that preserves the target. Planned sales volume shows the related revenue and profit.
• Revenue & volume uses unit cost, target margin and a total profit target to calculate required revenue and the number of whole units that must be sold.

All money inputs and results are intended to be entered before recoverable sales tax, VAT or GST.

How to use the target margin calculator

1. Select the result you want to solve for.
2. Enter a target profit margin from 0% to below 95%. Revenue & volume mode requires a margin above 0%.
3. Add the unit cost or selling price required by the selected mode.
4. Enter planned sales volume, or enter a total profit target in Revenue & volume mode.
5. Review the primary answer, supporting totals and the three margin scenarios.

Results update when an input changes. Sales volume must be a whole number. In Revenue & volume mode, required units are rounded up so the achieved profit may be slightly higher than the exact target.

Target margin formulas

Profit margin measures profit as a share of selling price. The calculator uses these relationships:

Required selling price = unit cost ÷ (1 − target margin)

Maximum allowable cost = selling price × (1 − target margin)

Profit per unit = selling price − unit cost

Required revenue = total profit target ÷ target margin

Required units = total profit target ÷ profit per unit, rounded up

Enter percentages as ordinary percentages. A 30% target margin is used as 0.30 in the formulas.

Worked selling-price example

With a unit cost of $60 and a target margin of 30%, the required selling price is $85.71. Profit is $25.71 per unit. At a planned volume of 100 units, total revenue is $8,571.43 and total profit is $2,571.43.

The scenario comparison shows how the same $60 cost changes the required price: $80.00 at a 25% margin, $85.71 at 30%, and $92.31 at 35%.

Worked allowable-cost example

Suppose the selling price is fixed at $250 and the target margin is 40%. The maximum allowable cost is $150 per unit, leaving $100 profit per unit. At 10 units, that represents $2,500 of revenue and $1,000 of profit.

A higher margin reduces the cost the price can support. At the same $250 price, the allowable cost is $162.50 at a 35% margin, $150.00 at 40%, and $137.50 at 45%.

Worked revenue and volume example

For an $80 unit cost, a 37.5% target margin and a $5,000 total profit target, the required unit price is $128.00 and the exact required revenue is $13,333.33. Profit is $48 per unit, so the calculator rounds the volume up to 105 units. Those whole units produce $5,040 of profit.

Margin is not markup

Margin and markup describe the same profit from different starting points. Margin divides profit by selling price. Markup divides profit by cost.

For example, a $60 cost sold for $85.71 creates about $25.71 of profit. That is a 30% margin because the profit is 30% of the selling price. The markup is about 42.86% because the same profit is compared with the $60 cost. Simply adding 30% to cost would produce a $78 price and a margin of about 23.08%, not 30%.

What to include in unit cost

The result is only as complete as the cost input. Include every cost that the sale needs to cover. Depending on the business, this may include materials, labor, payment fees, shipping, packaging, commissions, returns, discounts and allocated overhead. Avoid counting the same cost twice.

Use amounts excluding recoverable sales tax, VAT or GST. If a tax is not recoverable, include it in cost when appropriate for your accounting and pricing method. Tax treatment varies, so confirm the correct basis for the business and transaction.

How to interpret the scenario comparison

The lower, target and higher scenarios change margin by five percentage points while holding the entered unit cost or selling price constant. Use them to see how sensitive the decision is:

• in Selling price and Revenue & volume modes, a higher margin requires a higher unit price;
• in Allowable cost mode, a higher margin requires a lower unit cost; and
• near the 95% upper limit, the comparison is capped at 94.9%.

The scenarios are not demand forecasts. A mathematically required price may still be unrealistic for the market, and a lower allowable cost may not be operationally achievable.

Limitations

This calculator is a planning aid, not accounting, tax or pricing advice. It does not predict demand, competitor reactions, discounts, returns, capacity constraints or customer willingness to pay. It also assumes that the entered margin applies consistently to the units represented by the calculation.

Review the result against the full cost base, actual sales mix, current tax treatment and commercial context before changing a price or cost target.

Frequently asked questions

What is a target profit margin?

A target profit margin is the share of selling price you want to remain as profit after the costs included in your calculation. If the target is 30%, profit should represent 30% of the selling price.

Can the calculator find a selling price from cost?

Yes. Select Selling price, enter unit cost and target margin, and the calculator returns the price required per unit.

Can it calculate the maximum cost for a fixed price?

Yes. Select Allowable cost and enter the selling price and target margin. The result is the highest unit cost that leaves the intended share of the price as profit.

Why are required units rounded up?

A fraction of a unit usually cannot be sold. Revenue & volume mode rounds the unit count up to the next whole unit so the total profit target is met or exceeded.

Can I use a 0% margin?

A 0% margin is valid in Selling price and Allowable cost modes. It produces no profit: required price equals cost, or allowable cost equals selling price. Revenue & volume mode needs a positive margin because a profit target cannot be reached when profit is 0% of revenue.

Does the calculator include tax?

No separate tax input is used. Enter prices and costs before recoverable sales tax, VAT or GST, and handle non-recoverable tax according to the rules that apply to the business.