Markup and Margin Calculator

How it works

Markup and margin both describe the same gross profit, but measure it against different bases. Markup is profit as a percentage of what the item cost you. Margin is profit as a percentage of what you sold it for. Because the selling price is always larger than the cost when you make a profit, the margin percentage is always smaller than the markup percentage for the same sale.

Choose which figure you know. If you price by adding a markup to cost, enter the markup and the calculator finds the price and the margin. If you need to hit a target margin, enter the margin and it finds the price you must charge. If you already have a price, enter it and the calculator reports both percentages.

Whichever mode you choose, the other two fields are ignored. Gross profit is simply the selling price minus the cost; it does not account for overhead, taxes or discounts.

Formula

gross profit  = selling price − cost
markup %      = (selling price − cost) ÷ cost × 100
margin %      = (selling price − cost) ÷ selling price × 100
price from markup = cost × (1 + markup ÷ 100)
price from margin = cost ÷ (1 − margin ÷ 100)

Example

A product that costs $100 and is priced with a 50% markup sells for $150.00. The gross profit is $50.00. That $50 is 50% of the $100 cost (the markup) but only 33.33% of the $150 price (the margin).

Working the other way, to earn a 40% margin on the same $100 cost you would need to charge $100 ÷ (1 − 0.40) = $166.67, which is a 66.67% markup.

Assumptions and limitations

• Cost means the direct cost of one unit. Overhead, shipping, payment fees, returns and taxes are not included unless you add them to the cost.
• Gross profit is per unit before any discounts, so the real margin on a discounted sale is lower.
• A margin of 100% or more is impossible for a finite price, so the calculator rejects it.
• Results are for informational and educational purposes and are not financial, tax or accounting advice.

Frequently asked questions