Paint, Resin & Polymer Compounding worked example

Formula Margin at 40% target margin rate: a worked example in paint, resin & polymer compounding

What does the result look like when target margin rate reaches 40%? The full calculation is worked below with real intermediate numbers. you need a clean margin percentage on a formulation to defend pricing or flag formulas that fall below target

The inputs for this scenario

  • Gross margin per gallon: 9 $ / gal (unchanged)
  • Selling price per gallon: 30 $ / gal (unchanged)
  • Target margin rate: 40 % (raised for this scenario; the documented default is 35)

Working through the calculation

  • Applying the documented formula (Formula margin rate = gross margin per gallon / selling price per gallon * 100) to the inputs above produces each figure below.
  • At this operating point the engine returns 30 % for formula margin rate, the number this scenario is built around.
  • At this operating point the engine returns 10 points for gap to target margin.
  • At this operating point the engine returns 9 $ / gal for gross margin per gallon.
  • At this operating point the engine returns 30 $ / gal for selling price per gallon.

How this compares with the baseline

  • Against the tool's baseline example, where target margin rate sits at 35% and the headline result is 30 %, this scenario lands almost exactly on the baseline at 30 %.
  • A figure at this level is achievable when target margin rate is genuinely sustained, not just peaked for a shift. It uses a single gross-margin figure you supply, so it is only as accurate as your cost build-up — it will not catch under-absorbed overhead, freight, or waste allowances left out of that number.

Results at a glance

  • Formula margin rate: 30 % (headline result)
  • Gap to target margin: 10 points
  • Gross margin per gallon: 9 $ / gal
  • Selling price per gallon: 30 $ / gal

Run it with your numbers

  • Every input above is editable in the live Formula Margin calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.