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Cost ↔ Selling Price Converter
Derive selling price from cost + desired margin or markup — or find the cost from the selling price. Includes GST, discount, and minimum price analysis.
About this converter
This converter takes a product or service’s cost and tells you what selling price to set for any chosen margin or markup. Or it goes the other direction: given an existing selling price and cost, what margin are you actually earning? Both math directions use the standard pricing identity: SP = Cost / (1 − Margin%) for margin-based pricing, or SP = Cost × (1 + Markup%) for markup-based pricing.
For Indian small businesses, the practical wins come from three angles. First, intentional pricing: don’t pull a number from thin air — start with cost, add desired margin, round to a psychological price point (599 over 590, 999 over 1000). Second, channel-specific pricing: D2C website vs Amazon vs marketplace platforms charge different commissions (15-25%), so your selling price must be set higher on those channels to maintain a constant net margin. Third, restaurants and dine-in: food cost should be 28-32% of pre-GST menu price (factor in wastage + staff meals); below 25% margin and you can’t cover rent and salaries; above 40% and you’re likely overpriced for the segment.
For GST-registered businesses, always quote selling prices ex-GST internally — the tax is added at billing and is not revenue. Net margin = (Selling Price − Cost − Operating Expenses − Taxes) ÷ Selling Price.
Margin and markup are often confused. A 30% margin means 30% of the selling price is profit — the remaining 70% is cost. A 30% markup means you’ve added 30% of cost on top. 30% margin = 42.9% markup. In retail and GST invoicing, always clarify which basis you’re using.
Pricing Strategy — Cost to Selling Price
Pricing is the single fastest profit lever. Raising prices 1% with the same volume drops 100% to the bottom line. Cutting costs 1% does too — but is much harder to execute. The cost-to-SP math is where pricing decisions either build margins or quietly erode them.
Two ways to derive selling price from cost: markup pricing (Cost × (1 + Markup%)) — used when sourcing decides the math. Margin pricing (Cost ÷ (1 − Margin%)) — used when target profitability decides the math.
Indian Industry Margin Benchmarks
| Industry | Typical Gross Margin | Typical Net Margin | Pricing Notes |
|---|---|---|---|
| FMCG / Grocery retail | 15-25% | 2-5% | Volume game; MRP-led |
| Apparel & footwear retail | 40-55% | 15-20% | SKU-mix matters |
| Restaurants (dine-in) | 60-70% | 8-15% | Food cost ≤ 32% of menu |
| Jewellery | 10-30% | 3-8% | Making charges drive margin |
| SaaS / Digital | 70-90% | 20-40% | Pricing tiers + LTV |
| Professional services | 50-70% | 25-45% | Hourly or project-based |
| D2C e-commerce | 40-60% | 5-15% | CAC + platform fees eat margin |
The 1% Rule: A 1% price increase with no volume drop adds the full 1% to bottom-line profit. A 1% cost cut delivers the same. On a ₹50 lakh business at 10% net margin, either lever is ₹50,000 more profit a year — every year. Tiny pricing tweaks compound.
Pricing Examples Across Channels
Example 1: Same Product, Three Channels
Cost ₹400 product. Pricing strategy for: (a) own website — SP ₹999 (60% margin); (b) Amazon — SP must be ₹1,199 to net the same after 17% commission; (c) physical retail with 30% trade margin — MRP ₹1,499. Different channels need different SPs to maintain the same net margin.
Example 2: Restaurant Menu Engineering
Pasta with food cost ₹140. Target 70% gross margin → SP ₹467 + 5% GST → menu price ₹490 (rounded). The 30% food cost ratio is what restaurant consultants use as the litmus test for menu pricing.
Example 3: Premium Pricing Test
Same ₹400 cost product. Mass-market at ₹799 (50% margin), 1,000 units/month = ₹3.99 L revenue. Premium re-position at ₹1,499 (73% margin), 400 units/month = ₹5.99 L revenue with HIGHER profit. Volume × margin × price is the actual goal — not just one metric.
Common Pricing Mistakes
- Cost-plus only: Pricing by adding a flat markup ignores what customers will pay. Market-based pricing usually beats cost-plus.
- Forgetting GST in the math: Quote ex-GST internally; add tax at billing. Confusing the two erodes margin invisibly.
- Inventory shrinkage not priced in: Perishable retail loses 5-15% to spoilage/expiry. Cost should include this before applying margin.
- Free delivery loss: A ₹50 delivery cost on a ₹400 product eats 12.5% of revenue. Either price it in or set a minimum order value.
- Round-to-99 psychology: ₹999 outperforms ₹1,000 by typical 8-12% conversion lift. Always round selling prices to psychological points.