Gross margin calculator, and the price a target margin needs
Two questions, one formula. Enter a price and a landed cost to see the gross margin you make. Or switch mode, set the margin you want, and get the lowest price that delivers it.
Supplier cost plus freight-in plus duty. Work it out here if you only have the invoice price.
What the customer pays for one unit, after any standing discount.
The share of the selling price you want left after landed cost. Must be below 100.
Every A$60.00 sale keeps A$36.00 after landed cost: a 60% gross margin, or a 150% markup.
Price = landed cost ÷ (1 − margin). Each ten points of margin costs more price than the last, which is why high-margin targets get expensive fast.
Gross margin, forwards and backwards
Gross margin is gross profit as a share of the selling price. Run it forwards to read the margin a price gives you. Run it backwards to find the price a margin requires. Both use the same landed cost.
Gross margin worked on landed COGS is the same number as CM1, the first rung of the step-down on the contribution margin ratio page.
At A$60.00, a A$24.00 landed cost leaves A$36.00 of gross profit. A$36.00 ÷ A$60.00 = 60% gross margin, and A$36.00 ÷ A$24.00 = 150% markup.
For a 65% margin, cost can be only 35% of the price, so price = A$24.00 ÷ 0.35 = A$68.57. Check it: A$68.57 − A$24.00 = A$44.57, and A$44.57 ÷ A$68.57 = 65%.
The common slip is to add 65% to cost: A$24.00 × 1.65 = A$39.60, which is a 39.4% margin. That is a markup, not the margin you asked for.
These are your live inputs from the calculator above, not a canned example. Change a number up there and these paragraphs follow.
Questions operators ask
Subtract the landed cost from the selling price to get gross profit, then divide gross profit by the selling price and multiply by 100. A product that sells for A$60 and costs A$24 to land makes A$36 of gross profit, and A$36 divided by A$60 is a 60% gross margin. Our gross margin glossary entry covers the definition in full.
Landed COGS: the supplier cost plus freight-in plus duty. Many stores enter the invoice price alone, which leaves shipping the goods to the warehouse out of the cost and makes every downstream number inherit a margin that was never there. Outbound postage to the customer is not part of it. That belongs lower down, with fulfilment.
Divide the landed cost by one minus the target margin. For a 65% margin on a A$24 cost: A$24 divided by 0.35 is A$68.57. Do not add the margin percentage to cost. A$24 plus 65% is A$39.60, and that price only delivers a 39.4% margin. The margin vs markup converter explains why the two differ.
No. Gross margin stops at the cost of goods. Fulfilment, shipping, payment fees and marketing all come out after it, so an order with a strong gross margin can still lose money once it is delivered and paid for. The profit margin calculator steps down through each of those costs to the margin you keep.
It depends on what has to come out of it next. A gross margin is good when what remains still covers fulfilment, fees and the cost of acquiring the customer. Work out the margin before marketing with the contribution margin calculator, then check the break-even ROAS it sets for your ads.
Related: Gross marginWhere margin leaksPrice increase calculatorMargin vs markup converterAll free tools →
Gross margin per SKU, not per guess
This page runs one product at a time. Blufire computes margin per order, customer and SKU, reconciled to your ledger, and lets you pivot the profitability cube by any dimension you sell across.