I want the customer to pay a round 99 including VAT; what is my price before tax?
Divide 99 by (1 + rate ÷ 100). With 15 entered as the rate, your price before tax is 86.09 and the tax is 12.91, which add up to exactly 99. The calculator gives both figures in extract mode, and then one question remains: does 86.09 still cover your cost with a profit?
Why start from the shelf price instead of the cost?
Plenty of online sellers pick the number the customer sees first: 99 rather than 101, or 149 rather than 152. That number includes tax, but only the part before tax is yours to keep. So you work backwards, from the attractive number to the figure you type into your product settings if your store expects net prices, or the figure you base your profit on if it expects tax-inclusive ones.
The usual slip is to take the rate straight off 99. Removing 15% from 99 gives 84.15, about two short of the right answer, because the tax was charged on the net amount and not on 99.
The steps in the calculator
- Open the VAT calculator and choose Extract tax from a gross amount.
- Type 99 as the gross amount.
- Type the rate that applies to your product once you have confirmed it with your tax authority; this example uses 15.
- Read the net amount of 86.09 and the tax of 12.91, with the gross total staying at 99.
Enter 5 as the rate instead and the net becomes 94.29 with 4.71 of tax. The answer moves a lot with the rate, which is exactly why the tool never assumes one and only uses what you type.
Is the round price still profitable?
A neat shelf price can quietly eat your margin. Take the net price and put it with your cost into the Profit margin calculator. If the product plus packaging costs 55, then at 86.09 your profit is 31.09 and the margin about 36.11%. Measure the margin against 99 instead and it looks better than it is, because the tax was never your income.
If the margin falls short, step back: find the price that hits your target margin in the Selling-price calculator, then decide whether to move the shelf price up to the next tidy number, such as 109 or 119.
What about rounding?
The exact result of the division is 86.0869 and a string of further digits. The calculator shows the net rounded to 86.09 and works out the tax by subtraction as 12.91, so the total stays exactly 99. That stops a customer invoice from showing 98.99 or 99.01.
Common questions
Do I type 86.09 or 99 into my store?
It depends on your store settings: some platforms want the net price and add tax at checkout, others want the tax-inclusive price. Check the tax setting in your dashboard and enter the matching figure.
Does the calculator know which rate applies to my product?
No. You enter the rate after checking it, and the tool gives no tax advice.