Free calculator
Enter your selling price and profit margin to find the cost price behind any product.
Cost price
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What is
Cost price—also called the purchase price or buying price—is the amount a business spends to acquire or produce a single unit before applying any markup. It is the foundation of every pricing decision.
What you need to know about cost price:
Cost price covers what you pay to acquire or produce a unit—not commissions, outbound shipping, or other selling expenses.
Apply a profit margin to your cost price and you arrive at your selling price—the two figures are permanently linked.
Any change in supplier terms, exchange rates, or order quantities will shift your cost price and may require a price review.
How to calculate cost price
Cost price is calculated by taking the selling price and multiplying it by the result of 1 minus the profit margin (expressed as a percentage) divided by 100.
Why is calculating cost price important?
Set prices you can defend
Knowing your cost price prevents accidental underpricing that quietly erodes profit. It also gives you hard numbers to justify price decisions to buyers, investors, or your own finance team when margins come under scrutiny.
Protect margins when costs rise
When a supplier quote changes, recalculating cost price immediately shows whether your current selling price still holds or needs to be revised so you catch margin compression before it shows up in your accounts.
Make smarter purchasing decisions
Cost price is the lens through which you evaluate supplier quotes, negotiate volume discounts, and decide which products are worth stocking. When you track it consistently inside an inventory system, every purchase order becomes a data point that sharpens your overall pricing strategy and reveals which SKUs are genuinely profitable.
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