About the selling price calculator
Setting a price by adding a rough percentage to your cost is the most common way shops lose money without noticing. This calculator takes your cost price and the profit you want, and gives you the price to charge before tax, the tax, and the final shelf price. It also shows margin and markup side by side, because the two are easy to mix up.
How to use it
- Enter what one unit costs you, before any tax you can claim back.
- Choose whether your target is a margin (profit as a share of the selling price) or a markup (profit as a share of the cost), and enter the percentage.
- Pick GST, VAT or no tax and the rate that applies to the product.
- Read the selling price before tax, the tax amount, the price to print on the shelf tag and your profit per unit.
Tips for shop owners
- A 20% markup is not a 20% margin. If an item costs 100 and you add a 20% markup, you sell at 120 and your margin is 16.7%. To earn a 20% margin you need to sell at 125, a 25% markup. Quote the one your supplier and accountant mean.
- Price before tax, then add tax. Tax is collected for the government. Your margin should be worked out on the price before tax, not on the final shelf price.
- Allow for what else you spend. Margin here is gross profit. Rent, wages, wastage and card fees come out of it, so a thin gross margin can leave no net profit.
Frequently asked questions
- What is the difference between margin and markup?
- Margin is profit divided by the selling price. Markup is profit divided by the cost price. The same sale has a higher markup percentage than margin percentage.
- How do I calculate selling price from cost and margin?
- Selling price = cost / (1 - margin %). For a cost of 80 and a 20% margin, the selling price is 80 / 0.8 = 100.
- Should my cost price include GST?
- If you can claim the GST you pay as input credit, use the cost without GST. If you cannot claim it, for example under the composition scheme, include it in your cost.
- Is this calculator free?
- Yes. It runs in your browser with no signup, and nothing you type is sent to a server.