BIZOMAT Tools · Quoting
Price from Target Margin
What should you charge for the target margin?
Calculates the selling price that delivers a target gross margin on a known cost, and shows the equivalent markup.
Open the calculatorRuns in your browser. No account needed.
How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Total job / product cost | $ | Total cost of the job or product |
| Target gross margin | % | Target gross margin from your pricing policy |
What each input means
Open an input to see what it is, its units, the worked example and the common mistakes, with a small diagram.
What this means: Total job / product cost
- What it is
- Everything it costs to deliver the job or one unit of product: material, labour, overhead and any other cost you want the price to cover.
- Units and format
- Enter a number in $: an amount of money; use one currency for every money input. The form accepts $0 or more.
- Example
- The form opens with $700 as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- The required price rises in proportion to cost.
- Get it right
- Use the fully loaded cost; leaving out overhead makes the margin look better than it is.
What this means: Target gross margin
- What it is
- The gross profit you want to keep, expressed as a percentage of the selling price, from your pricing policy.
- Units and format
- Enter a number in %: percent: the number is read as a percentage, so type 8 for 8 %. The form accepts 0% to 99%.
- Example
- The form opens with 30% as a worked example. It is an illustration, not a recommended value: replace it with your own figure.
- Effect on the result
- Price = cost ÷ (1 − margin), so the price climbs steeply as margin approaches 100 %.
- Get it right
- This is margin on price, not markup on cost; the tool shows the equivalent markup.
Method and formulas
- Price = cost ÷ (1 − margin)
- Markup = margin ÷ (1 − margin)
Limitations
- Prices exclude GST, commissions and freight
- Ignores what the market will pay
Typical uses
- Pricing new products and jobs
- Explaining margin versus markup
Who it is for
- Estimators
- Sales staff
- Business owners
What you get
- Required price, gross profit and equivalent markup
Interpreting the result
- Check the result against market prices before using it
BIZOMAT tools are screening and decision-support utilities. Verify important financial, engineering, safety, legal or operational decisions using appropriate professional standards and your organisation’s approved data.