See what a supplier cost increase does to your margin
If your supplier changes this item's cost and you keep your selling price unchanged, what happens to your gross margin? This calculator shows that impact and the selling price that preserves the margin you had before.
How to read these results
- Previous gross margin is what you earned at the old cost and the current selling price: (selling price − cost) ÷ selling price.
- Current gross margin is the same formula with the new cost, assuming you keep the selling price unchanged.
- Margin change is the difference between the two, in percentage points.
- Selling price to preserve previous margin is the price that keeps the old margin rate: new cost ÷ (1 − previous margin).
- Price adjustment needed is the difference between the selling price that preserves your previous margin and your current selling price.
The math, made transparent
Gross margin (as a rate):(selling price − cost) ÷ selling price. To keep the margin you had when cost rises, use:new cost ÷ (1 − previous margin).
Worked example (numbers are illustrative, in any currency): a cost of $50 sold at $100 earns a 50% margin. If cost rises to $60 and price stays $100, margin falls to 40%. Preserving the 50% margin needs a selling price of 60 ÷ (1 − 0.5) = $120 — a $20 increase.
Margin is not markup
Gross margin is profit as a share of the selling price; markup is profit as a share of cost. They are different numbers with different denominators. This calculator uses gross margin only. Confusing the two is a common reason a price increase does not actually protect your margin.
When you should interpret carefully
- Previous cost is zero: the previous margin is 100%, and no single selling price preserves it. Percentage cost change is left blank instead of shown as infinity.
- New cost is zero: no positive selling price preserves a lower margin, so the preserving price is not shown.
- Cost above selling price: margin is negative. The calculator still shows the selling price needed to restore your previous margin.
- Selling price is zero: margin cannot be calculated, and results are left unavailable rather than guessed.
Ready for the full picture? See how to decide between absorbing, passing through, renegotiating, and reviewing sourcing after a supplier price increase.
Have hundreds of SKUs?
This calculator handles one item. To see margin impact and target selling prices across an entire supplier price list, compare your previous and current lists with CostRift.
Compare your full supplier price list