Enter cost and price
Price from a target margin
How to use the margin calculator, and the basics of pricing
When pricing goods — retail, handmade or food service — the question is always how much actually stays with you. From cost and selling price this tool computes gross profit, gross margin, cost ratio and markup, and it can also work backwards from a target margin to the price you need.
How to use it
The upper section derives the ratios from a cost and a selling price; the lower section works backwards from a target margin to the required price — "I need 40% margin on a cost of 600" gives the answer directly. Enter tax-exclusive figures throughout.
The classic mistake: "40% profit" means two different things
Margin (profit ÷ selling price) and markup (profit ÷ cost) are not the same number. At a cost of 600 and a price of 1,000, the margin is 40% but the markup is about 67%. Confusing them wrecks a pricing model: adding 40% to cost does not produce a 40% margin — 600 × 1.4 = 840 gives a margin of only about 29%. For a genuine 40% margin you need 600 ÷ 0.6 = 1,000. Always check which basis a supplier or spreadsheet is using.
Wholesale "kakeritsu"
Japanese wholesale quotes often use kakeritsu — the purchase price as a fraction of the list price. "Six" means buying at 60% of list, which is a 60% cost ratio and a 40% margin. Negotiating the kakeritsu down translates directly into margin.
Gross profit is not operating profit
What this tool reports is gross profit: revenue minus the cost of goods only. Shipping, payment fees, marketplace commission, packaging, advertising, rent and wages all come out afterwards to reach operating profit. Online marketplaces commonly take around 10% of revenue, which is why a 30% gross margin can leave almost nothing. The safe habit is to fold every variable cost into the cost figure before pricing.
Finding your break-even
Divide fixed costs by the gross margin to get the revenue you need. With 300,000 yen of monthly fixed costs and a 40% margin, that is 300,000 ÷ 0.4 = 750,000 yen a month to break even. Before discounting, check how much that required figure rises. See also the consumption tax calculator and the discount calculator.
Frequently asked questions
What is the difference between margin and cost ratio?+
Margin plus cost ratio equals 100%.
What is the difference between margin and markup?+
The denominator differs, so the values differ. This tool shows both.
How do I find the price from a target margin?+
For example, a cost of 600 with a 40% target margin gives 600 / 0.6 = 1000.
Is tax included?+
To work with tax-inclusive figures, convert to net first with the tax calculator.
Are my inputs stored?+
・Gross profit = price − cost
・Margin (of price) = profit ÷ price × 100
・Cost ratio = cost ÷ price × 100 (= 100 − margin)
・Markup (of cost) = profit ÷ cost × 100. The denominator differs from margin, so the same item yields different figures.
・Price from a target margin = cost ÷ (1 − target margin)
・Business Accounting Principles (Japan), Income Statement Principles: gross profit is presented as net sales less cost of sales
・Small and Medium Enterprise Agency, Japan. Basic Survey of Small and Medium Enterprises: publishes gross profit ratios by industry, useful for comparing against a sector average
This site does not represent any organization and does not guarantee the accuracy of the results. Definitions (margin vs markup) vary by industry and source. For exact accounting or tax treatment, consult a professional such as an accountant.