See whether your price increase recovered higher costs and preserved your original margin rate.
About this calculator
Enter annual revenue, cost of goods or services as a share of revenue, your price increase, and the cost increase you are absorbing. The calculator separates two pricing thresholds: the increase required to recover added cost dollars and the increase required to preserve your existing gross-margin rate.
It then compares your price increase with both thresholds and shows the annual dollar impact. Results assume flat volume and proportional cost changes across the entered cost base. For more information, visit our Pricing and Revenue Management page.
Your numbers
What your numbers show
Your entered price increase is 3%. That recovers the added cost dollars but does not fully preserve your original margin rate.
Your cost increase adds $138K a year; your price increase adds $150K, a net margin gain of $13K.
Recovering added cost keeps gross-profit dollars flat after costs rise. Preserving the margin rate keeps the original gross-margin percentage unchanged. Under the calculator's assumptions, the cost-recovery threshold equals your cost share multiplied by the cost increase, while preserving the margin rate requires pricing to rise by the same percentage as the affected cost base.
What this means
Your price increase recovers cost but not your original margin rate.
The gap between what you raised prices and what your minimum required increase would have been is the margin cushion or shortfall shown above. This calculation assumes volume stays flat; a price increase that changes demand will produce a different result.
