Price for target margin: Working Back from a Target Gross Margin
A target-margin price leaves the chosen share of sales after the entered cost. Dividing by one minus the margin gives a different result from simply adding the percentage to cost.
Use the Price for target margin Calculator to enter your own figures and compare the result with the worked example below.
Price for target margin formula
Selling price = Cost ÷ (1 − Target margin)
Worked example
| Item | Example value |
|---|---|
| Cost | 100 USD |
| Target margin | 20 % |
| Price for target margin | 125 USD |
These are illustrative inputs, not current prices, rates or recommended targets. Where a currency is shown, keep all comparable money amounts in the same currency; conversion examples identify the two sides separately.
How to interpret the result
A target margin below 100% is required. Whether customers will pay the result is a separate commercial question.
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Method and further reading
The example follows the FinMathly calculator method. For broader background, see SEC: Understanding financial statements. The background resource may use jurisdiction-specific terms; it does not replace the assumptions of this calculator.
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