Set a price from cost, target margin and price elasticity.
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.
Pricing
Price = cost ÷ (1 − target margin); volume responds by elasticity × price change
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.
With elasticity between zero and minus one, raising price always raises revenue, which is why measuring elasticity matters more than benchmarking margin.
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.