Markup and Margin Calculator
Turn a cost into a price, and see the markup and margin side by side.
Good to know. A 50% markup is only a 33% margin. Mixing the two up is a classic way to underprice.
How it works
In plain words
Markup compares the profit with the cost. Margin compares the same profit with the selling price. So margin is always the smaller number when you make a profit.
The formula
profit = price − cost markup = profit ÷ cost × 100 margin = profit ÷ price × 100 price from margin = cost ÷ (1 − margin ÷ 100)
Worked example
Buying at 40 and selling at 60.00 gives a profit of 20. That is a 50% markup (20 ÷ 40) but a 33.33% margin (20 ÷ 60).
Sources
No outside data or rates: this is plain arithmetic.
8 automated tests check its answers on every change.
About the markup and margin calculator
Markup and margin both describe profit as a percentage, which is why they get confused so often. The difference is what you divide by. Markup divides profit by the cost. Margin divides profit by the selling price.
That makes a big difference. Buy something for 40 and sell it for 60, and you have a 50% markup but only a 33% margin. If you mean to earn a 50% margin but price with a 50% markup, you will earn much less than planned.
Retailers often think in markup, because it is easy to apply to a cost: add 50% and you have a price. Finance and investors usually talk about margin, because it tells you how much of every sale is profit. A 30% gross margin means 30 of every 100 in revenue is left after paying for the goods.
To hit a target margin, divide the cost by (1 − margin). For a 30% margin on a cost of 40, that is 40 ÷ 0.7 = 57.14. A margin can never reach 100%, because that would mean the goods cost nothing.
Here, cost means the cost of the goods themselves. Overheads such as rent and salaries come out of the margin afterwards, so "gross" margin is not the same as final profit.
Questions people ask
What is the difference between markup and margin?
Markup is profit divided by cost. Margin is profit divided by selling price. Cost 40, price 60: 50% markup, 33.3% margin.
How do I price for a 30% margin?
Divide the cost by 0.7. A cost of 40 needs a price of 57.14.
How do I convert markup to margin?
margin = markup ÷ (100 + markup) × 100. A 50% markup is a 33.3% margin.
Can margin be more than 100%?
No. Margin is a share of the price, so it can approach 100% but never reach it. Markup has no upper limit.