Pricing Calculator

Set a price from cost, target margin and price elasticity.

About Pricing Calculator

Margin is calculated on price while markup is calculated on cost, so a 60 per cent margin is a 150 per cent markup. Elasticity determines whether a price rise increases profit despite losing volume. With elasticity between zero and minus one, raising price always raises revenue, which is why measuring elasticity matters more than benchmarking margin.

Formula

Pricing

Price = cost ÷ (1 − target margin); volume responds by elasticity × price change

margin: Profit as a share of price, not of cost
elasticity: Percentage volume change per percentage price change, normally negative

Worked example

With the default values below, Pricing Calculator returns Price for the Target Margin of $105.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Unit costminimum 0: 42
Target gross marginaccepts 0–99 %: 60 %
Current priceminimum 0.01: 95
Current monthly volumeminimum 0: 800
Price elasticity of demandaccepts -6–0: -1.4

Results

Price for the Target Margin: $105.00
Markup on Cost: 150.00%
Projected Volume at That Price: 682.1 units
Current Monthly Gross Profit: $42,400.00
Projected Monthly Gross Profit: $42,972.63

Step by step

1Values used
2Pricing
3Price for the Target Margin= 105.00
4Markup on Cost= 150.00
5Projected Volume at That Price= 682.1 units
6Current Monthly Gross Profit= 42,400.00
7Projected Monthly Gross Profit= 42,972.63

Assumptions and limits

The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Pricing calculated?

Price = cost ÷ (1 − target margin); volume responds by elasticity × price change Margin is calculated on price while markup is calculated on cost, so a 60 per cent margin is a 150 per cent markup. Elasticity determines whether a price rise increases profit despite losing volume.

Why does Pricing matter?

With elasticity between zero and minus one, raising price always raises revenue, which is why measuring elasticity matters more than benchmarking margin.

What values do I need to enter?

This calculator takes 5 inputs: Unit cost, Target gross margin, Current price, Current monthly volume, Price elasticity of demand. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.