Price Calculator
Calculator Use
In sales, it is often necessary to calculate the selling price based on the known cost of an item and the desired gross margin of the store or company. You can calculate the selling price you need to establish (revenue) in order to achieve a desired gross margin on a known product cost. Also, will calculate mark up percentage on the product cost and and, the dollar value of the gross profit. Enter the original cost and your required gross margin to calculate selling price, mark up and gross profit. This calculator is the same as our Mark Up Calculator.
* Price (or Selling Price) = Revenue
This calculator shows the steps in solving the formulas to arrive at the calculated values for Revenue, Gross Profit and Mark Up.
Price Formulas/Calculations:
- To calculate the selling price or revenue R based on the cost C and the desired gross margin G, where G is in decimal form:
- R = C / ( 1 - G)
- The gross margin is the Profit divided by the selling price or revenue R
- G = P / R
- So, the gross profit P is the selling price or revenue R times the gross margin G, where G is in decimal form :
- P = R * G
- The mark up percentage M, in decimal form, is gross profit P divided by cost C.
- M = P/ C
- M * 100 will change the decimal to a percentage.
Example Price Calculation
Given the Cost C of an item is $125.00 and the desired Gross Margin G is 75%, calculate Revenue R, Gross Profit P and Mark Up.
\[\text{Revenue} = \frac{\text{Cost}}{1 - \text{Gross Margin}}\] \[\text{Revenue} = \frac{125.00}{1 - 0.7500}\] \[\text{Revenue} = 500.00\]
\[\text{Gross Profit} = \text{Revenue} \times \text{Gross Margin}\] \[\text{Gross Profit} = 500.00 \times 0.7500\] \[\text{Gross Profit} = 375.00\]
\[\text{Mark Up} = \frac{\text{Gross Profit}}{\text{Cost}} \times 100\] \[\text{Mark Up} = \frac{375.00}{125.00} \times 100\] \[\text{Mark Up} = 300.00\% \]