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Product Margin & Pricing Tool

Calculate your product's gross margin or determine the optimal selling price based on your desired margin. This flexible tool helps you make smart pricing decisions to ensure profitability.

/ 01

Price with Confidence

Set prices that ensure every sale contributes to your bottom line.

/ 02

Hit Profit Targets

Work backwards from your profit goals to find the right price point.

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Understand Profitability

Instantly see the gross profit and margin for any of your products.

The calculator

Run the numbers

Margin & Pricing Calculator

Enter Cost and EITHER Selling Price OR Desired Margin.

The direct cost to acquire the product.

Enter this to calculate your margin.

Enter this to calculate your selling price.

Results

Enter values and click Calculate to see results

The theory

Understanding Margin & Pricing.

Gross margin is the difference between revenue and the cost of goods sold (COGS), divided by revenue, expressed as a percentage. It is a key indicator of a product's profitability.

/ Formula

It's crucial not to confuse markup and margin. Markup is the amount by which the cost of a product is increased in order to derive the selling price (e.g., cost + markup = price). Margin is always a percentage of the selling price. This calculator focuses on Gross Margin, which is the more common and powerful metric for financial health.

Gross Margin % = ((Selling Price − COGS) / Selling Price) × 100
/ Industry standard

General retail often aims for a margin of around 50-55% ('keystone pricing'). High-volume goods like groceries might have margins of 10-20%, while luxury items like jewelry or cosmetics can have margins of 70% or higher.

Questions, answered

Frequently asked questions.

Gross margin only considers the Cost of Goods Sold (COGS). It tells you how profitable a product is on its own. Net margin is calculated after subtracting all operating expenses (rent, salaries, marketing, etc.) from revenue. Gross margin measures product profitability, while net margin measures overall business profitability.
It varies widely. General retail often aims for a margin of around 50-55% (this is also known as 'keystone pricing'). However, high-volume goods like groceries might have margins of 10-20%, while luxury items like jewelry or cosmetics can have margins of 70% or higher.
COGS should include all direct costs associated with getting the product ready for sale. This includes the purchase price from the supplier, shipping and freight-in costs, import duties, and any costs for materials or packaging that are part of the final product.
You have two main levers: price and cost. You can try to 1) Increase the selling price, but be mindful of customer perception and competitor pricing. 2) Decrease the cost of goods by negotiating with suppliers, buying in larger quantities, or finding more efficient shipping methods. 3) Focus on selling a better mix of higher-margin products.
Not necessarily. A common strategy is to have a blended margin target. You might accept a lower margin on high-volume 'traffic driver' products that get customers in the door, while aiming for a much higher margin on more exclusive, unique, or slower-moving items.
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