Margin and markup are not the same
On a 12.00 cost sold at 20.00, the markup is 67% (8.00 profit on 12.00 cost) but the margin is 40% (8.00 profit on 20.00 price). Confusing the two is the single most common pricing error — a '50% markup' target produces a 33% margin, not 50%.
Working backwards is the right direction
Start from the margin your business needs (to cover marketing, returns, overhead and profit), then derive the price. Pricing forward from cost and hoping the margin works out is how sellers end up busy and broke.
The ladder matters
The output shows the price at 45–70% margins. Look at the spread: the jump from 50% to 60% margin is a large absolute price increase, and it tells you whether your positioning can bear it or whether you need a cheaper cost base instead.
- Compare against the market, not just your cost
- Build payment and marketplace fees into the cost line
- Test price elasticity in small steps, not one big jump
Fees change the target
If a marketplace takes 15%, a 45% gross margin before fees becomes roughly 30% after. Price to the margin you need after fees, or model the whole chain in the FBA or Shopify calculators.
Frequently Asked Questions
Which should I use, margin or markup?
Use margin for pricing decisions and markup for quick mental maths on cost. Retail reporting almost always uses margin.
Why can't margin be 100%?
Price = cost / (1 − margin); at 100% the denominator is zero. Above about 80% the required price becomes unrealistic.
Should I round prices?
Charm pricing (9.99) works in consumer categories; B2B and premium goods often read better at round numbers.
Assumptions & disclaimer
Results are estimates for planning. Fee schedules, tax brackets and deduction limits change; confirm current figures with the marketplace, the IRS or a qualified accountant before making decisions. Nothing here is financial, tax or legal advice.
Privacy & Your Data
BizCalcTool runs entirely in your browser. The figures you enter are never uploaded, stored or shared — there is no backend to send them to.