Get the gross margin percentage of cost and multiply it to the new unit cost to get maintain the same gross margin percentage of cost. Units Selling Price :  2.50     Unit Cost                - 1.00 Profit Margin          :  1.50 Gross profit margin % on sales: 1.50 / 2.50 = 0.60 x 100% = 60% Gross profit margin % on cost : 1.50 / 1.00 = 1.50 x 100% = 150% If the cost increase by $0.25  Unit cost : 1.00 + 0.25 = 1.25 1.25 * 150% = 1.875 gross margin. Gross margin + Unit Cost = Unit Price 1.875             + 1.25        = 3.125 Gross margin % on sales : 1.875 / 3.125 = 0.60 x 100% = 60% Gross margin % on cost   : 1.875 / 1.25   = 1.50 x 100% = 150%