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How to calculate Price from target margin

The Price from target margin formula, with plain worked examples you can check yourself.

Price from target margin = C ÷ (1 − m)

Worked examples

C = 40 · m = 60%Price from target margin = 100
C = 60 · m = 40%Price from target margin = 100
C = 60 · m = 60%Price from target margin = 150

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Positioning & Pricing.

Related terms

Value propositionMarket segmentationPenetration pricingPrice skimmingCompetitive pricingUnique selling proposition

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