Selling Price Calculator

Working backwards from the margin you want

A cost price of ₹700 with a target 30% margin gives a selling price of ₹1,000 and a profit of ₹300.

Note that this is not ₹700 plus 30%. Adding 30% to cost gives ₹910, which is a 23% margin — not the 30% intended. Pricing by adding the target margin percentage to cost is the single most common pricing error in small business, and it understates the price every time.

The two formulas

From a target margin — where the percentage is of the selling price:

Selling price = cost ÷ (1 − margin ÷ 100) 700 ÷ (1 − 0.30) = 700 ÷ 0.70 = ₹1,000

From a target markup — where the percentage is of the cost:

Selling price = cost × (1 + markup ÷ 100) 700 × 1.30 = ₹910

Both are legitimate; they answer different questions. The ₹90 gap between them on this small example scales directly with volume, and a business pricing an entire catalogue the wrong way leaves a substantial amount on the table.

Building the cost price properly

The selling price is only as good as the cost that feeds it. A complete landed cost includes:

Purchase price from the supplier.

Inbound freight and insurance, which on imported goods can be 5–15% of value.

Customs duty and clearing charges where applicable.

Packaging for onward sale.

Payment processing — card and gateway fees of 1.5–3% that are easy to forget because they appear on a separate statement.

Wastage, breakage and returns, best handled as a percentage uplift on cost based on actual experience.

For a service business, the equivalent is the fully loaded cost of delivery — not just the hourly wage but the employer's share of PF, paid leave, equipment and the unbillable time that supports billable work.

Beyond cost-plus

Cost-plus pricing is simple and defensible, and it has a structural weakness: it prices against your costs rather than against what the customer values. A more complete approach checks the cost-plus figure against two other anchors:

Competitive price — what comparable offerings sell for. Being substantially above requires a reason the customer can see.

Value-based price — what the outcome is worth to the buyer. For services and software especially, this can be far above cost-plus, and cost-plus pricing on high-value work is how specialist providers end up underpaid.

Use cost-plus as a floor below which you will not go, then price up from there where the market allows.

GST

Decide explicitly whether your target margin is computed on GST-inclusive or GST-exclusive figures, and be consistent. For a registered business, GST is collected and remitted rather than earned — it should not appear in either cost or revenue for margin purposes, because input tax credit makes it a pass-through.

For an unregistered business unable to claim input credit, GST paid on purchases is a real cost and belongs in the cost price.

Reading the result

The price is a starting point. Check it against competitors and against the customer's perceived value before committing, and remember that the lowest price rarely wins profitably — it wins volume at the cost of the margin that funds everything else.

Common mistakes

Adding the margin percentage to cost. Divide by (1 − margin) instead.

Using an incomplete cost price. Freight, fees and wastage all belong in it.

Pricing purely on cost. It ignores what the buyer values.

Mixing GST bases. Be consistent on both sides.

Discounting without recomputing. A 20% discount on a 30% margin leaves a 12.5% margin, not 10%.