Given cost, target gross margin, and a discount, work backwards to the list price and the discounted selling price.
Input Data
Results
At a glance:This calculator derives a list price that, after applying a discount, still yields a specified gross margin on the discounted sale price.
Formula
salePrice = cost / (1 - targetMarginPercent%)
listPrice = salePrice / (1 - discountPercent%)
profit = salePrice - cost
How to Use
- Enter the cost per item.
- Enter the target gross margin after discount.
- Enter the planned discount rate.
- Review the list price, discounted sale price, and profit per item.
FAQ
Why should I set the list price based on the discount I plan to give?
If you first price to hit your target margin and then discount later, the discount eats directly into that margin and you fall short of your goal. By baking the discount in up front and working backwards to a higher list price, you can give the discount and still protect your target margin — the classic 'discount on the tag, margin in the pocket' approach.
Can I enter a 100% target margin or a 100% discount?
No. Margin is based on the selling price, so 100% would mean the cost is zero, which mathematically makes the sale price infinite (division by zero). The tool therefore caps the target margin and the discount below 100%. A 100% discount would mean giving the item away free and would also push the list price to infinity.
How much higher must the list price be for a bigger discount?
The bigger the discount, the higher the list price must be to keep the same after-discount price and margin. For a fixed after-discount price, a 10% discount needs list = price ÷ 0.9, a 30% discount needs ÷ 0.7, so the list price rises noticeably. Bear in mind that too high a list price can hurt how customers perceive the item's value.
Why plan the discount first then reverse to the list price, instead of discounting later?
This is a practical but often overlooked retail-pricing strategy. If you price to your target margin first and then discount on the spot, the discount is deducted straight from the margin you already worked out. For example, cost HK$80, priced at HK$133.33 for a 40% margin, then a 10% off means the customer pays HK$120 and the margin drops to (120 − 80) ÷ 120 = 33.3% — nearly 7 points lost. The smarter way (this tool's logic): decide the after-discount margin you want, so the after-discount price must be HK$133.33, then since you give 10% off, set the list at 133.33 ÷ 0.9 = HK$148.15. The customer sees HK$148.15, gets 10% off and pays HK$133.33, while you still earn a full 40% margin. This 'price up then cut down' tactic buries the discount inside the list price so it acts as a promotion hook without sacrificing the profit you actually want. It matters most for frequent promotions, coupons and member discounts, otherwise repeated discounting can leave you 'selling more but earning less'.
What is the difference between gross margin and markup, and why can't the target margin be 100%?
Both describe how much a deal earns, and the profit amount (price − cost) is identical, but their denominators differ. Gross margin = (price − cost) ÷ price (price is the base) — it answers 'what share of the price is profit'. Markup = (price − cost) ÷ cost (cost is the base) — it answers 'how much is added on top of cost'. Since price is always greater than cost, the margin percentage is always smaller than the markup percentage for the same deal. For example, cost HK$80, price HK$120, profit HK$40: margin = 40 ÷ 120 = 33.3%, markup = 40 ÷ 80 = 50%. Never mix the two. This tool uses the price-based gross margin. As for the 100% limit: gross margin uses the price as denominator, so 100% would mean '100% of the price is profit', i.e. a zero cost. In the formula salePrice = cost ÷ (1 − margin), at 100% the denominator is zero and the price tends to infinity. That is why the tool requires the margin to be below 100%, and the same logic applies to the discount rate.
References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.