How Should I Price a Product?
Work backward from the margin you want, not forward from a markup that feels right — that's the difference between a price that guesses at profitability and one that guarantees it.
Direct answer
The most reliable way to price a product is to work backward from the margin you want, not forward from a markup percentage that "feels right." Starting from your target margin means the price you land on always delivers the profitability you actually intended.
An item costs you ₵80. You want a 30% gross margin on it.
| Cost | ₵80 |
| Target Margin | 30% |
| Selling Price (₵80 ÷ 0.70) | ₵114.30 |
Check: Gross Profit = ₵114.30 − ₵80 = ₵34.30. Margin = ₵34.30 ÷ ₵114.30 = 30%. ✓
Why this is different from "cost plus a markup"
If you instead simply added a 30% markup to the ₵80 cost, you'd price at ₵104 — and get a margin of only 23%, not 30% (see Gross Margin vs. Markup for why). If margin is what you actually care about, pricing from margin directly avoids that gap entirely.
Other factors that belong in the decision
The formula above gets you a mathematically correct starting price. It doesn't account for what customers are willing to pay, what competitors charge, or how price-sensitive a particular product is — all real factors that a formula alone can't tell you. Use the target-margin price as your starting point, then adjust based on what you know about your market.