How to Calculate a Minimum Price in Excel With Percentages

Calculating a minimum selling price gets tricky when fees and profit targets are percentages. The key is to identify what each percentage is calculated from: the selling price or your cost. A fee taken from the selling price reduces the amount you keep, so simply adding that percentage to your costs will usually understate the price you need.

Formula when percentages are based on the selling price

Let:

• $C$ be your total cost per item;
• $f$ be fees expressed as a fraction of the selling price;
• $m$ be your desired profit margin, also as a fraction of the selling price;
• $P$ be the minimum selling price before any separately charged sales tax.

After fees, you keep $P(1-f)$. To achieve a profit margin of $m$, profit must be $mP$, so the amount left for costs is $P(1-f-m)$. Set that equal to your costs:

$$P(1-f-m)=C$$

Therefore:

$$P=\frac{C}{1-f-m}$$

This works when both the fee and desired profit are percentages of the selling price. The denominator must be positive: if $f+m$ is at least 1, no finite price can meet the target under this model.

Set up the calculation in Excel

For example, enter these values:

Cell	Value	Meaning
A2	40	Cost per item
B2	10%	Selling-price fees
C2	20%	Desired profit margin

In another cell, enter:

=A2/(1-B2-C2)

The exact result is $57.142857\ldots$, which displays as $57.14 when rounded to two decimal places. At the unrounded price, the fee is about$5.71, leaving about $51.43. After subtracting the$40 cost, profit is about $11.43, exactly 20$57.14, rounding down makes the margin very slightly less than 20%; round the price up if the target must be met.

Enter percentages as 10% and 20%, or enter 0.10 and 0.20 and format those cells as percentages. Do not enter 10 and expect Excel to interpret it as 10%; that value means 1,000% in the formula.

If you have several per-item costs, add them first. For example, if product cost is in A2 and packaging cost is in A3, you can use:

=SUM(A2:A3)/(1-B2-C2)

Margin and markup are different

A profit margin is profit divided by selling price. A markup is profit divided by cost. The same percentage does not give the same price under both definitions.

If you want a markup of $r$ on cost and fees are still a fraction $f$ of the selling price, the target revenue after fees must cover both cost and markup: $P(1-f)=C(1+r)$. Thus:

$$P=\frac{C(1+r)}{1-f}$$

With a $40 cost, a 20% markup, and a 10% fee, Excel can calculate the price with:

=A2*(1+C2)/(1-B2)

The result is about $53.33. This is lower than the$57.14 price for a 20% margin because the two targets are defined differently.

Include fixed profit or other charges

If instead you want a fixed profit amount, put that amount in a cell such as D2. With costs in A2 and selling-price fees in B2, use:

=(A2+D2)/(1-B2)

For instance, a $40 cost, a$10 fixed profit target, and a 10% fee require a price of about $55.56.

Include any per-item costs that you must pay, such as packaging or shipping you absorb, in the cost total. If a charge is a fixed amount per sale rather than a percentage, add it to costs; do not put it in the percentage part of the formula.

Sales tax and other percentage charges

Sales tax is often collected from the customer and remitted to a tax authority. If it is added to the price at checkout, it is generally not part of the seller’s revenue or profit calculation: calculate your selling price first, then add the applicable tax. Rules and pricing conventions vary by location and sales channel.

If a percentage tax or charge is included in the displayed price and taken out of the amount you receive, treat it as a percentage deduction from that price. Add it to the other selling-price percentages in the denominator. Be careful not to count a tax twice if your platform already excludes it from the reported sales amount.

Common mistakes

• Adding a fee percentage directly to cost. A 10% fee on the selling price is not the same as adding 10% to cost. The fee grows as the price grows, so solve using the denominator.
• Mixing margin and markup. Check whether the target is a percentage of the selling price or of the cost before choosing the formula.
• Treating fixed fees as percentages. Add a fixed per-sale fee to costs; only use the percentage formula for charges that vary with price.
• Ignoring the denominator. If selling-price fees plus target margin approach 100%, the required price rises sharply. If their sum reaches 100%, the formula has no finite solution.
• Rounding too early. Keep the full calculated value in Excel and format the result as currency. Round the final price up to the smallest amount you can actually charge if you must not fall below the target.