Margin & Markup Calculator
Enter a cost price and selling price to see your profit, margin and markup side by side. Then use target margin pricing to find the exact selling price you should quote to hit the margin your business needs.
Handy for shop owners setting shelf prices, online sellers checking a product's margin, and consultants who price on value rather than hours.
Display only. Amounts are not converted.
Margin result
- Profit
- $250.00
- Margin
- 33.33%
- Markup
- 50%
Selling at $750.00 against a $500.00 cost gives you a 33.33% margin — the same numbers work out to 50% markup, which is why the two are so often confused.
Smart next steps
Target margin pricing
Know the margin you need? We work backwards to the selling price you should quote.
A 100% margin is impossible — margin is always less than 100%.
Required selling price
- Cost price
- $500.00
- Target margin
- 30%
- Profit at this price
- $214.29
- Sell at
- $714.29
Formula
Profit = Selling price − Cost price
Margin % = Profit ÷ Selling price × 100
Markup % = Profit ÷ Cost price × 100
Selling price for a target margin = Cost ÷ (1 − Target margin ÷ 100)
Margin = Markup ÷ (1 + Markup) · Markup = Margin ÷ (1 − Margin)
Worked example
Cost $500, selling price $750:
- Profit: $250.00
- Margin: 33.33% (250 ÷ 750)
- Markup: 50% (250 ÷ 500)
Target margin of 30% on a $500 cost:
- Required selling price: $714.29
- Profit at that price: $214.29
The percentages are identical whichever currency you pick above.
How to use this calculator
- 1Enter the cost price and the selling price, both excluding tax.
- 2Read the gross margin percentage measured against revenue.
- 3Compare it with the markup figure so you know which number you are quoting.
When businesses use it
- Setting a minimum margin rule for your sales team before they discount.
- Reporting product-wise margin to a lender or investor who asked for gross margin.
- Checking that a marketplace's commission still leaves you an acceptable margin.
Margin versus markup, and why the confusion costs money
Margin and markup describe the same profit against two different bases. Margin divides profit by the selling price and answers the question a lender or investor asks: how much of every dollar, pound or rupee of sales do you keep? Markup divides the same profit by the cost price and answers the trader's question: how much did I add on top of what I paid?
Because the denominators differ, the two numbers never match. A 50% markup is a 33.3% margin, a 100% markup is a 50% margin, and a 25% markup is only a 20% margin. Businesses that add 25% to cost while believing they are earning a 25% margin quietly lose five percentage points on every sale, which is often the entire net profit of a trading business.
Margin also has a ceiling: it can approach 100% but never reach it, because profit can never exceed the selling price. Markup has no ceiling at all. Whenever someone quotes a percentage above 100%, they are almost certainly talking about markup.
Pricing habits that protect margin
- Work backwards from a target margin instead of adding a habitual percentage to cost.
- Use cost excluding VAT or GST when you can reclaim that tax as input credit.
- Include inward freight and wastage in cost before computing margin.
- Model the margin left after a discount before you approve a scheme.
Margin vs markup, explained simply
Margin answers "how much of the money I collect do I keep?" It is the number to use when comparing profitability across products or reporting to a lender.
Markup answers "how much do I add on top of what I paid?" It is the number to use when pricing stock up from a purchase invoice. The markup vs margin guide walks through where each one is used.
The same profit always gives a higher markup than margin:
| Markup on cost | Equivalent margin |
|---|---|
| 10% | 9.09% |
| 20% | 16.67% |
| 25% | 20% |
| 33.33% | 25% |
| 50% | 33.33% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.67% |
How margin affects your selling price
Because margin is measured against the price, each extra point of margin costs more than the last. For an item that costs $100:
| Target margin | Selling price | Profit |
|---|---|---|
| 20% | $125.00 | $25.00 |
| 30% | $142.86 | $42.86 |
| 40% | $166.67 | $66.67 |
| 50% | $200.00 | $100.00 |
| 60% | $250.00 | $150.00 |
Going from 50% to 60% margin needs the price to rise from $200 to $250. That's why margin targets are usually set per product category rather than across a whole catalogue.
Margin when prices include tax
Sales tax, VAT and GST aren't yours to keep, so remove them from both the cost and the selling price before working out a percentage. A $1,200 sale that includes 20% VAT is really $1,000 of revenue; a $720 purchase at the same rate is really $600 of cost. That's $400 profit and a 40% margin. Running the same sum on the tax-inclusive figures measures profit against tax you never earned.
Once you have your selling price, test a whole order with the profit calculator, add tax and build the customer price with the selling price calculator, or see how many units that margin needs to cover your fixed costs with the break-even calculator.
Learn the maths behind it
- How to calculate profit margin
Margin % = (Selling price − Cost) ÷ Selling price × 100. Always measured against revenue, not cost.
- Markup vs margin
Markup is calculated on cost; margin on the selling price. The same rupee profit gives two different percentages.
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