Pricing & Margin Calculator

A pricing and margin calculator answers the founder's most common pricing question in one click: given my unit cost and target gross margin, what price do I need to charge? This free pricing and margin calculator uses the standard formula — price = cost ÷ (1 − target margin) — and surfaces profit per unit, markup percentage, and the margin-to-markup conversion that trips up most operators. Margin (% of price) and markup (% of cost) are NOT the same number, and confusing them is the fastest way to underprice a product into bankruptcy.

The pricing and margin calculator formula

Required price = unit cost ÷ (1 − target gross margin). If your unit cost is $12 and you want a 65% gross margin, the required price is $12 ÷ 0.35 = $34.29. The pricing and margin calculator returns this number instantly along with the profit per unit ($22.29 in this example) and the markup percentage (185.7% — yes, really; see the next section). The denominator's 1 − margin is the most common formula mistake operators make when they try to compute required price in their head.

Margin vs markup — the critical conversion most operators botch

Margin is expressed as a percentage of price; markup is expressed as a percentage of cost. A 65% margin equals a 185.7% markup. A 50% margin equals a 100% markup. A 33% margin equals a 50% markup. Confusing them — for example, applying a 65% markup thinking you've achieved a 65% margin — actually delivers only a 39.4% margin, a 25-point gap that can kill a business. The pricing and margin calculator surfaces both numbers side by side specifically to eliminate this confusion. Retailers and manufacturers tend to think in markup; SaaS and finance teams tend to think in margin.

When to use a pricing and margin calculator

Reach for a pricing and margin calculator whenever a new SKU launches, a competitor changes prices, a supplier raises costs, or a reseller asks for preferential pricing. The pricing and margin calculator is also useful for sanity-checking a competitor's claimed gross margin — back-compute what their unit cost must be to deliver the margin they claim at the price they sell at, and you can usually tell whether they're stretching the truth. For subscription SaaS, the same formula applies, with monthly ARPU as the 'price' and cost of serving one customer per month as the 'unit cost.'

Frequently asked questions

What's the difference between margin and markup?

Margin is the percentage of the selling price that is gross profit (profit ÷ price). Markup is the percentage of the cost that is gross profit (profit ÷ cost). A 50% margin equals a 100% markup; a 33% margin equals a 50% markup. The pricing and margin calculator surfaces both numbers side by side to prevent the most common operator pricing mistake.

What's a healthy gross margin for a SaaS business?

70-85% is the typical range for vertical-SaaS and horizontal-SaaS businesses, with infrastructure-heavy or AI-inference-heavy products often running 50-70% (because of GPU and API costs). Below 60% gross margin in SaaS is a yellow flag for investors. The pricing and margin calculator helps you find the price that delivers your target margin once you know your unit cost.

Can the pricing and margin calculator handle subscription pricing?

Yes. For monthly subscriptions, treat ARPU (average revenue per user per month) as the price and the cost of serving one customer per month (hosting + payment fees + support cost + third-party APIs) as the unit cost. The pricing and margin calculator then returns the ARPU you need to hit your target gross margin.

Why is a 65% margin a 185.7% markup?

Because the two percentages are computed against different bases. 65% margin means $6.50 of profit on every $10 of revenue. To get $6.50 of profit, your cost must be $3.50; $6.50 ÷ $3.50 = 1.857, or 185.7% markup. The pricing and margin calculator computes this conversion automatically so you never have to do the algebra in your head during a pricing call.

Related free resources: Break-Even Point calculator · LTV calculator