Free tool
What does a cost increase do to your margin?
A supplier raises a cost from 10.00 to 11.00. Your shelf price is 20.00. This calculator shows the margin before and after, and the two prices that undo the damage: one that keeps your margin percent and one that keeps the same money per unit.
Results
- Cost change
- Gross margin before
- Gross margin after, at the same selling price
- Margin change
- Markup before
- Markup after
- Price that keeps your margin percent
- Price that keeps the same profit per unit
Gross margin is the selling price minus the supplier cost, as a percent of the selling price. It ignores freight, discounts, rebates, tax and every other cost, so it is not net profit. Percentages are rounded to two decimals.
How the numbers are worked out
- Gross margin % = (selling price minus cost) divided by selling price, times 100.
- Markup % = (selling price minus cost) divided by cost, times 100. Markup is always the larger number. A 50% margin is a 100% markup.
- Margin change in points = old margin minus new margin. Going from 50% to 45% is a change of 5 points, not 5%, and not a 5% drop in profit.
- Price that keeps your margin = new cost divided by (1 minus old margin). With a 10% cost increase the price also rises 10%.
- Price that keeps the same profit per unit = selling price plus the cost change. This is the smaller increase, and your margin percent still falls a little.
Checking a whole price list instead of one product? The price list checker matches every product in a supplier's new list to the old one and shows the margin change per row when you add a selling price column.