Margin and Markup Calculator

Use Margin and Markup Calculator

Works out margin and markup together, because they describe the same profit against different denominators and quoting the wrong one costs real money.

Work from

CostSelling price

A 50% markup is a 33.3% marginMarkup measures profit against cost; margin measures it against the selling price. Anyone who prices for a 50% margin by adding 50% to cost earns a third less than they planned, every single sale.

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About Margin and Markup Calculator

Use the margin calculator to inspect profit as a share of selling price or work backwards from a target margin to a price. With a cost of 80 and a selling price of 100, profit is 20 and margin is 20%. The corresponding markup is 25% because markup divides the same profit by cost. This page shows both to make the denominator visible, but margin is the main pricing question it answers. To target a 25% margin on a cost of 80, divide 80 by 0.75, giving about 106.67. Applying a 25% markup would produce 100 and a lower margin. Use consistent cost assumptions, distinguish gross profit from net profit, and review negative-profit scenarios when a discounted price falls below cost.

Using Margin and Markup Calculator

Give it a cost and a price you already use, and it reports the profit along with both percentages, so you can see immediately which figure a supplier or spreadsheet has been quoting.
Give it a cost and a target margin, and it works out the price by dividing by one minus the margin. That division is the step people skip when they add the percentage instead.
Give it a cost and a markup, and it multiplies to get the price, then reports the margin that actually results.
A target margin of one hundred per cent or more is refused rather than answered. Margin is a share of the selling price, so it approaches one hundred without ever reaching it while the item costs anything at all.
A price below cost is accepted and reported as negative profit, because sometimes that is the honest answer to a pricing question and hiding it would be worse.

Where margin and markup calculator helps

Checking what a supplier's percentage means

Enter the cost and the price they suggest. If the resulting margin is well below the percentage they quoted, they were talking about markup.

Setting a price from a required margin

Use the target margin mode. For a cost of 100 and a 40% margin the price is 166.67, not 140 - and the difference is the whole point of the tool.

Before you use the result

This is gross margin, calculated from the direct cost of the item. It says nothing about net margin, which comes after overheads, salaries, marketing and tax.
Your cost figure needs to be the full landed cost. Excluding shipping, duty, payment processing fees or returns will overstate every result here.
Retail and hospitality often quote margin, while manufacturing and wholesale often quote markup. When a supplier states a percentage, it is worth asking which one they mean before comparing it with your own.
Discounting cuts margin faster than intuition suggests, because the discount comes entirely out of profit rather than being shared with cost. A ten per cent discount on a thirty per cent margin removes a third of the profit.
VAT and sales tax should be excluded from both figures. Mixing gross and net numbers produces a margin that looks better than it is.

Questions about Margin and Markup Calculator

What is the difference between margin and markup?

Both describe the same profit. Markup divides it by the cost; margin divides it by the selling price. Since the price is higher, the margin percentage is always the smaller number.

How do I convert one to the other?

Margin equals markup divided by one plus markup. A 50% markup gives 0.5 / 1.5, which is 33.3% margin. This page does the conversion for you both ways.

Why can't I have a 100% margin?

Because that would mean the entire selling price is profit and the item cost nothing. The formula divides by one minus the margin, so 100% divides by zero. The tool refuses rather than returning a nonsense price.

Is this gross or net margin?

Gross. It uses the direct cost of the item only. Net margin subtracts overheads and tax as well, and needs figures this calculator does not ask for.

Are my numbers sent anywhere?

No. The arithmetic runs in this tab and nothing is transmitted, which matters if you are working with real cost prices.