Margin / Markup Calculator
Calculate profit margin and markup from cost and selling price, with the relationship explained.
About Margin / Markup Calculator
Profit margin and markup are two ways to express the same profit, and confusing them is one of the most common pricing errors in small business. A margin calculator converts between cost, selling price, and both percentages so you always know what your pricing actually returns.
Margin = profit ÷ selling price, while markup = profit ÷ cost. For a $50 cost and an $80 price, margin is 30 ÷ 80 = 37.5% while markup is 30 ÷ 50 = 60%. Because margin uses the larger denominator, it is always the smaller percentage. To price for a target margin, divide cost by (1 − margin), so $50 ÷ 0.6 = $83.33 for a 40% margin.
Retailers and e-commerce sellers use it to set prices that sustain their business, freelancers and agencies calculate healthy project margins, and accountants verify that quoted percentages are internally consistent. Anyone moving from markup to margin pricing, common when selling to distributors, benefits from seeing both numbers side by side.
How to Use
- Enter the cost and the selling price.
- Read gross profit, margin %, and markup %.
- Use the reverse mode to find a price from a target margin.
Example
Cost $50, selling price $80 Profit $30 · Margin 37.5% · Markup 60%
Margin is profit ÷ price (30 ÷ 80 = 37.5%); markup is profit ÷ cost (30 ÷ 50 = 60%). They answer different questions.
FAQ
What's the difference between margin and markup?
Margin is profit as a share of the selling price; markup is profit as a share of the cost. Markup is always the larger percentage.
How do I price for a target margin?
Divide cost by (1 - target margin). For 40% margin on $50 cost: 50 ÷ 0.6 = $83.33.
Why do these numbers matter?
Margin tells you what you keep per sale; markup tells you how much you add to cost. Mismatching them causes pricing errors.
Can a margin exceed 100%?
No. Since margin is profit divided by the selling price, it approaches 100% as profit approaches the full price but can never exceed it. Markup, however, can exceed 100% because it is measured against the lower cost base.
What margin do most healthy businesses aim for?
Targets vary by industry, but 30-50% gross margin is common for many product businesses, while service businesses often target higher. The right number depends on your costs, competition, and growth plans.