How to fix a selling price
Every product needs a price that covers its cost, earns the profit you want and includes the GST you must collect. Doing this on a calculator leads to errors — people add margin on cost when they meant margin on price, forget freight, or apply GST before rounding. This tool builds the price step by step: cost → other costs → profit → GST → rounding → optional trade discount gross-up.
Formulas
- Total cost = Purchase/production cost + freight, packing, labour per unit
- Price excl. GST (margin basis) = Total cost ÷ (1 − margin %)
- Price excl. GST (markup basis) = Total cost × (1 + markup %)
- Price incl. GST = Price excl. GST × (1 + GST %)
- List price with trade discount d = Net price ÷ (1 − d)
Worked example
A furniture maker's chair costs ₹1,200 in material and labour plus ₹50 packing — ₹1,250 total. He wants a 30% margin. Price excl. GST = 1,250 ÷ 0.70 = ₹1,785.71. Furniture attracts 18% GST, so the customer price is ₹2,107.14, which he rounds to ₹2,110. Profit is ₹538 per chair. Had he used 30% markup instead, the price would be ₹1,625 + GST = ₹1,917.50 and his margin only 23%.
Offering dealer discounts without losing margin
If you will give dealers a 15% trade discount but still want your 30% margin on what you actually receive, the list price must be grossed up: 1,785.71 ÷ 0.85 = ₹2,100.84 excl. GST. Enter the discount in the tool and it handles this automatically.
GST is not your profit
Many first-time sellers treat the GST-inclusive receipt as revenue and are surprised at the tax outflow. Always compute margin on the taxable value. Remember also to enter your net purchase cost — if you claim input tax credit on purchases, the GST paid to your supplier is not a cost.
Psychological pricing
The ₹…99 rounding option pushes the inclusive price to the next figure ending in 99 (₹2,107 → ₹2,199), a common retail practice. Rounding changes the realised margin slightly; the results show the actual margin and markup after rounding so you know exactly what you earn.
Frequently Asked Questions
Should I add GST before or after adding my profit?
After. Price = (Cost + Profit) first, then add GST on that taxable value. GST is collected for the government and never forms part of your margin.
What is the difference between margin basis and markup basis?
Margin % is on the selling price, markup % is on cost. For the same percentage figure, margin basis gives a higher price. Pick the one your business actually targets.
How do I price if my competitor sells at a fixed MRP?
Work backwards: remove GST from the MRP, subtract your total cost, and the balance is your profit. Use the Markup Calculator in reverse mode or the Profit Margin Calculator for that.
Which GST rate should I choose?
The rate for your HSN/SAC code — commonly 5%, 12%, 18% or 28%. Check with the GST Rate Finder tool if unsure.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.