Why divide cost by one minus margin?

Gross margin divides profit by sales revenue. Solving that relationship for revenue gives cost divided by one minus the margin fraction.

Is gross margin the same as markup?

No. Margin divides profit by revenue; markup divides profit by cost. A 25% margin corresponds to a 33.333% markup.

Does fixed setup receive the margin?

Yes. Fixed job costs join variable costs before the margin is applied. This pricing policy recovers the selected margin across the whole entered job cost.

Can the target margin reach 100%?

No. A positive-cost job cannot have a 100% gross margin at a finite selling price. Enter a target below 100%.

Tube, Pipe & Profile Forming calculator

Quote Price Calculator

Calculate a tube order price from variable and fixed job costs at your chosen gross margin. Enter cost per accepted tube, fixed job costs, quantity and margin.

What this calculator does

Price a tube order to recover job costs at your entered gross margin.

Formula used

Job cost = quoted quantity × variable cost per tube + fixed job cost
Total quote = job cost ÷ (1 − target gross margin ÷ 100)
Unit quote = total quote ÷ quoted quantity
Gross profit = total quote − job cost
Equivalent markup = target margin ÷ (100 − target margin) × 100

Inputs explained

Quoted Tube Quantity: Uniform tube quantity on the customer request.
Variable Cost per Tube: Complete variable production cost per accepted tube.
Fixed Job Cost: One-time setup, tooling and other fixed job costs.
Target Gross Margin: Approved gross profit as a percentage of quote revenue.

How to use the result

Best suited to uniform tube order Quote, margin target comparison.
A gross margin target does not guarantee net profit or customer acceptance. Freight, taxes and other omitted scope require separate additions.

Current U.S. benchmarks

The producer price index for steel mill products stands at 381.162 (BLS, Aug 2026), up 23.4% from a year earlier. Quotes priced off last quarter's material cost miss this move.

Common questions

Why divide cost by one minus margin? Gross margin divides profit by sales revenue. Solving that relationship for revenue gives cost divided by one minus the margin fraction.
Is gross margin the same as markup? No. Margin divides profit by revenue; markup divides profit by cost. A 25% margin corresponds to a 33.333% markup.
Does fixed setup receive the margin? Yes. Fixed job costs join variable costs before the margin is applied. This pricing policy recovers the selected margin across the whole entered job cost.
Can the target margin reach 100%? No. A positive-cost job cannot have a 100% gross margin at a finite selling price. Enter a target below 100%.

Last reviewed 2026-10-06.