Most margin calculators ask for a cost. This one asks for the landed cost — the number that already includes freight, duty and destination charges — because margin measured against FOB is a number that does not survive contact with an invoice.
| Price change | New price | Net / unit | Net margin |
|---|
This is the single most expensive confusion in wholesale pricing. Margin is profit as a share of the selling price. Markup is profit as a share of the cost. A product bought at $10 and sold at $15 has a 33.3% margin but a 50% markup — and a seller who thinks "I add 33% to cost" is actually pricing at $13.33 and earning a 25% margin.
| Formula | $10 cost, $15 price | |
|---|---|---|
| Gross margin | (price − cost) ÷ price | 33.3% |
| Markup | (price − cost) ÷ cost | 50.0% |
Always quote margin when talking to a buyer, because their category benchmarks are margins. Use markup when you are setting a price from a cost base. The difference compounds: at a 40% target margin the multiplier on cost is 1.667; at a 40% markup it is 1.4.
A container of goods at FOB $10,000 with $2,400 freight, $980 destination charges and 2.6% duty lands at roughly $13,630 — call it 36% above the FOB number. If you price at a 35% margin against FOB, your real margin against landed cost is closer to 5%, and it took no bad decision to get there. Just the wrong denominator.
The margin calculator therefore takes the landed figure. If you do not have it, run the landed cost calculator first — it writes the per-unit cost into this page for you.
This page runs the chain forwards. If you already know the price you can sell at and need the factory price that supports it, the target price to FOB calculator runs the identical chain backwards — retailer margin, your margin, duty, freight and VAT — and returns the largest FOB you can accept.
Gross margin is a product-level number and it stops at the warehouse door. The field for selling costs captures the deductions that scale with revenue and therefore change your net:
Put them in and the "net after selling costs" figure is the one that compares with your bank balance. Leave them out and you will be looking at a gross number that is 5–20 points better than reality.
If you carry fixed costs — a trade show, a certification, a tooling amortisation — dividing them by the net contribution per unit gives the number of units that pays for them. Below that quantity the product is not funding itself, no matter how healthy the percentage looks.
A 10% price cut on a 33% gross margin removes about 30% of the absolute profit. That asymmetry is why discounting is a last resort in low-margin categories and why the table is more useful than the headline number: it tells you how much room you actually have to negotiate.
The calculator gives you the answer. These guides give you the reasoning, so you can tell when the answer is wrong.
Margin and markup from the same sale, why the cost input has to be landed cost, and how to find the break-even volume that covers fixed costs.
Read the guide → Pricing · 7 minWorking back from a retail price to the maximum FOB you can pay, why subtraction fails on capped fees, and what the answer means in a negotiation.
Read the guide →