How do I calculate a sale price with margin and VAT?

First calculate the price before tax by dividing cost by 1 minus the target margin and variable fees. Then add VAT to get the customer-facing price.

Should margin be calculated before or after VAT?

Use the price before VAT when analyzing profit. Tax collected from the customer is not business margin.

Should I include card or marketplace fees?

Yes. Any fee tied to the sale reduces margin and should be included as a variable fee.

Sale price with margin and VAT calculator

Use this calculator to price products without confusing tax with profit. Enter cost, target margin, VAT, and the variable fee from cards, marketplaces, or payment processors.

Formulas

Price before VAT

Price before VAT = Cost / (1 - Target margin - Variable fee)

Final price

Final price = Price before VAT x (1 + VAT)

Example

If a product costs 70, your target margin is 35%, VAT is 12%, and fees are 3%, the suggested price before VAT is 112.90 and the final customer price is 126.45.

VAT is not margin

To measure profitability, analyze profit on the price before tax. Tax collected from the customer is not business profit.

Use the price before VAT. Margin should be measured after cost and variable fees, before tax is added.

The recommended price becomes very high because too little percentage remains to cover cost. Review cost, fees, or target margin.