Reverse Markup Calculator

Cost: $20, Want: 30% margin after 20% discount Sale price: $20 / (1 − 0.30) = $28.57 List price: $28.57 / (1 − 0.20) = $35.71 Markup: 78.6%

Reverse markup pricing is a strategic approach businesses use to determine the initial list price of a product when they plan to offer a discount but still need to achieve a specific profit margin. Instead of simply adding a markup to the cost, this method works backward from your desired profitability and a planned markdown.\n\nIt is particularly vital for e-commerce stores, retailers, and service providers who frequently run sales, promotions, or offer coupons. Without reverse markup, businesses risk setting an initial price too low, leading to insufficient profits after discounts are applied, or too high, making their discounts seem less appealing.\n\nThe process involves first calculating the minimum sale price required to meet your target margin based on the product's cost. Once that internal sale price is established, you then calculate the higher list price that, when discounted by your planned percentage, will bring it down precisely to that minimum sale price. This ensures that your promotional pricing remains attractive to customers while safeguarding your financial goals.