Reverse Calculator

What Price Hits Your Target Margin?

To earn a 40% margin on a $20 cost, you must charge $33.33 — a profit of $13.33 per unit (a 66.7% markup). Below $33.33 you fall short of your margin goal no matter how many you sell.

Results

Visualization

Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.

How It Works

This is the inverse of the margin formula: Price = Cost / (1 - Target Margin%). It is the right tool when a contract, a platform fee, or an investor requires a minimum margin. Watch the asymptote — as target margin approaches 100%, the required price explodes.

What Should You Do?

Scenario 1: a contractor must clear 35% margin after material costs of $400 → bid at least $615.38. Scenario 2: a SaaS reseller with $5 COGS and a 70% margin target prices at $16.67. Scenario 3: if the market caps price at $25, your max sustainable margin on a $20 cost is only 20%.

Frequently Asked Questions

When should I use reverse pricing?

When a margin floor is fixed by a client, a franchise, or your own profitability rule. Start from the margin you need, not from a guessed price.

What if the required price is above market?

Then the cost is too high or the margin goal is unrealistic. Renegotiate cost, cut waste, or accept a lower margin — do not silently sell below your floor.

How is this different from markup?

Markup starts from cost and adds a percentage; reverse pricing starts from the margin you must keep and solves for price. Same math, opposite direction.

Authoritative References

Corporate Finance Institute — Pricing — Cost-plus and target-margin pricing models.
SBA — Set Your Price — Small-business pricing guidance.