💰 Price Calculator

Gross Profit Formula

Gross profit tells you how much money you actually make after covering costs. It can be found by multiplying the selling price by the gross margin:

P = R × G

Where:

• P = Gross Profit
• R = Revenue (Selling Price)
• G = Gross Margin (in decimal form)

For example, if your selling price is $500 and your gross margin is 75% (0.75), then:

P = 500 × 0.75 = 375

This means your gross profit is $375. If you want to see how different profit levels affect your targets, the Profit Goal Calculator can be helpful.

Markup Percentage Formula

Markup shows how much extra you’re charging over the cost, expressed as a percentage. The formula is:

M = (P / C) × 100

Where:

• M = Markup Percentage
• P = Gross Profit
• C = Cost

Using the earlier example, where cost = $125 and gross profit = $375:

M = (375 ÷ 125) × 100 = 300%

This means the product is sold at 300% markup on cost. To quickly compare markup levels across different scenarios, try the Markup Calculator.

Step-by-Step Example

Let’s walk through the full calculation with real numbers:

• Cost (C): $125
• Gross Margin (G): 75% (0.75)

1. Revenue (R):
   R = 125 ÷ (1 – 0.75)
   R = 125 ÷ 0.25
   R = $500
2. Gross Profit (P):
   P = 500 × 0.75
   P = $375
3. Markup (M):
   M = (375 ÷ 125) × 100
   M = 300%

So, with a cost of $125 and a 75% margin goal, the selling price should be $500, gross profit will be $375, and the markup is 300%.

Why These Calculations Matter

Understanding the connection between cost, selling price, profit, and markup is vital for setting sustainable pricing strategies. Overpricing may reduce sales, while underpricing could eat into your profits. Tools like the Profit Calculator and Sales Calculator can give you extra insight into balancing revenue goals with costs.

If your focus is more on profitability ratios, the Profit Margin Calculator offers another angle by showing margins directly.

The Price Calculator is a practical way to take the guesswork out of pricing decisions. By plugging in your cost and desired gross margin, you can instantly see the required selling price, the dollar value of gross profit, and the markup percentage. This clarity helps businesses make informed decisions that align with financial goals and keep pricing competitive.