Free calculator
A cost and a target become a price, net and on the shelf, with the same euro of profit shown as both a margin and a markup so a target can never be hit against the wrong denominator.
Price on the shelf, incl. VAT
€48,92
16Net price
€41,11
what a P&L sees
Margin
55,0%
of the net price
Markup
122,2%
of the cost
Profit as a share of the price you sell at. Never reaches 100%.
↑ ↓ to nudge, Shift for ten. Commas or dots both work.
This price covers the goods and nothing else. The parcel, the payment fee and the advertising still have to come out of the profit above, which is what the pricing floor calculator works out in full.
€41,11 of that is revenue, and €22,61 of it is profit after the goods. The same euro reads as a 55,0% margin or a 122,2% markup, depending on which one you were asked for.
An estimate from flat rates. In nouz every order is priced from the costs of its own day.
A markup and margin calculator turns a unit cost plus a target into a price. Margin measures profit against the selling price and markup measures it against the cost, so the same euro reads as two very different percentages, and this shows both plus the shelf price including VAT.
The formula
Margin divides profit by the price you sell at. Markup divides the same profit by what the unit cost you. Both describe one euro, and the gap between the two percentages widens with every point of profit: 50% margin is 100% markup, 60% margin is 150% markup.
That is why pricing to a target has to name which one it means. Multiplying a €18,50 cost by 1,55 to hit “55%” produces €28,68 and a margin of 35,5%, nearly twenty points short of the target that was set. Dividing by 0,45 produces €41,11 and hits it exactly.
The third trap is VAT. The price the customer sees still contains it, and it was never yours, so a target hit on the shelf price is missed on the statement by roughly a sixth at German rates. Set the target on the net price, then add VAT.
Where it goes wrong
Each of these produces a price that looks like it hit the target and did not.
Cost times 1,55 is a markup of 55%, not a margin of 55%. On a €18,50 unit the two land €12 apart, and the multiplied version quietly ships a catalogue priced twenty points under its own target. If a spreadsheet ever produced a suspiciously round price, this is usually why.
The tax authority takes its share of every shelf price before you see a cent, so a 55% target hit on €49,00 including VAT is really 46% of the €41,18 that reached your revenue. Enter net targets and let the calculator add VAT afterwards.
A margin after goods pays for nothing on its own: the parcel, the payment fee, the advertising and a slice of rent all come out of it. A 40% goods margin on a small basket is frequently a loss by the time the parcel ships, which is what the pricing floor calculator is for.
Heavy products, returned products and cheap products all consume more of their margin than a catalogue average suggests. Uniform targets are convenient and reliably wrong at both ends: they overprice what sells easily and underprice what costs most to serve.
Worked example
The calculator’s defaults: a unit costing €18,50, a target margin of 55%, VAT at 19%. Dividing the cost by 0,45 gives €41,11 of net revenue, which puts €48,92 on the shelf.
The €22,61 of profit that produces is a 55,0% margin and a 122,2% markup. Both sentences describe the same coin; only one of them answers a question about the price.
Had the same target been applied as a multiplier, the shelf price would have been €34,13 and the margin 35,5%. That is the entire distance between the two words, on one ordinary product.
What this price does NOT yet cover is the parcel, the fee and the advertising. The floor those impose is the next calculator below.
In the app
A calculator works from flat rates you type once. nouz prices every single order from the cost rules that were in force on that order's own date, and rebuilds the same statement every night from your own orders and your own ad spend.
More calculators
Each one is a different question about the same statement. All 32 are free, and none of them asks you to sign up.
All calculatorsThe terms this calculator uses
The long version
Want the long version rather than the arithmetic?
Four floors€22 to €68on the same unit, depending on what it must cover9 min readMargin-based pricing: building a price from what it must coverCost plus a percentage prices for the goods and nothing else. Build the price from the costs an order really carries, then sanity-check it against the market.Margin-based pricingnouz prices every unit you actually sold at the cost that was effective on its own order date, so the catalogue's real margins stand next to the ones it was priced for.