1. What is the Selling Price Formula?

The selling price formula calculates the price at which a product should be sold based on its cost and desired profit margin. This ensures businesses cover costs and achieve their target profitability.

2. How Does the Calculator Work?

The calculator uses the selling price formula:

Where:

• \( Cost \) — The cost to produce or acquire the product (USD)
• \( Margin \) — The desired profit margin (expressed as decimal, e.g., 0.25 for 25%)

Explanation: The formula accounts for the relationship between cost, margin, and selling price, ensuring the selling price covers both the cost and desired profit.

3. Importance of Selling Price Calculation

Details: Accurate selling price calculation is crucial for business profitability, competitive pricing, and financial planning. It helps ensure all costs are covered while achieving target profit margins.

4. Using the Calculator

Tips: Enter cost in USD and margin as a decimal between 0 and 0.99. All values must be valid (cost > 0, 0 ≤ margin < 1).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between margin and markup?
A: Margin is profit as percentage of selling price, while markup is profit as percentage of cost. This calculator uses margin.

Q2: How do I convert percentage margin to decimal?
A: Divide percentage by 100 (e.g., 25% margin = 0.25 decimal).

Q3: What if my margin is 100%?
A: Mathematically impossible in this formula as it would require division by zero. Margins must be less than 100%.

Q4: Can I use this for service pricing?
A: Yes, the formula works for both products and services when you know your costs and desired margin.

Q5: How should I account for variable costs?
A: Ensure your cost input includes all variable and fixed costs associated with the product or service.