Price Increase Calculator

The Cost Pass-Through Math

A 10% cost increase does NOT mean you need a 10% price increase. If cost is 60% of your selling price and goes up 10%, your total cost increases by only 6% of the selling price.

Example: 60% cost share, 10% cost increase, 40% target margin → (10% × 0.60) ÷ (1 − 0.40) = 6% ÷ 0.60 = 10% price increase needed. The higher your margin, the less you need to raise prices.

Cost Increase Pass-Through Table

Notice: the higher your margin, the less you need to raise prices. A business with 60% margins only needs a 4% price increase to offset a 10% cost jump, while a 20%-margin business needs 8%.

Three Pricing Response Strategies

Full pass-through: Raise prices enough to maintain your margin rate. Mathematically clean, but you risk losing price-sensitive customers to competitors who absorb some of the increase.

Partial pass-through: Split the pain between you and your customers. This is the most common approach — most businesses pass through 50-80% of a cost increase and absorb the rest.

Absorb & offset: Hold prices steady and find savings elsewhere. Reduce waste, renegotiate other supplier contracts, streamline operations, or adjust product specs to offset the higher input cost.