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Markup and Margin Calculator

Markup and margin from any two of cost, price and target — and what confusing them costs on every sale.

Pick what you know, then enter the two figures.

What the item costs you.

What you sell it for.

Optional. Scales the totals.

Exact calculation. Given your inputs, this is the answer — no estimation involved.

How this calculator works

Markup and margin are built from the same two numbers and they are not the same ratio. Markup is profit over cost — how much you added to what you paid. Margin is profit over price — the share of the sale you keep.

Buy at $100, sell at $150, and you have a 50% markup and a 33.3% margin. Both describe the same $50. Neither is more correct; they answer different questions.

The trouble starts when they get swapped, and it always goes the same direction. Someone told to hit a 30% margin applies a 30% markup instead, prices at $130 rather than $142.86, and takes a 23% margin — roughly a quarter less profit than planned, on every unit sold.

The gap widens as the numbers rise. A 50% margin needs a 100% markup; a 66.7% margin needs 200%. Anyone selling on margin while thinking in markup loses more the better the product does.

Any two of cost, price, markup and margin determine the other two, so this solves from whichever pair you have. That makes it useful for setting a price rather than only for checking one after the fact.

The formula

Exactly what happens to your numbers, step by step.

  1. The two ratios

    markup = profit ÷ cost
margin = profit ÷ price

  2. Converting between them

    markup = margin ÷ (1 − margin)
margin = markup ÷ (1 + markup)

  3. Pricing from a target

    price = cost × (1 + markup)
price = cost ÷ (1 − margin)

A worked example

An item costing $100, where the business needs a 30% margin.

What you enter

Cost
$100
Target margin
30%

The working

Correct price
$100 ÷ (1 − 0.30) = $142.86
Which is a markup of
42.9%
Applying 30% as a markup
$130.00
Margin that actually gives
23.1%
Given away per unit
$12.86

$142.86 — not the $130 the confusion produces

Nearly thirteen dollars a unit, on a hundred-dollar item, from one word. On a thousand units that is $12,860, and nothing about the mistake announces itself — the business simply makes less than it planned and cannot see why.

Assumptions

Every result here rests on these. Change your inputs and the result changes with them.

  • Cost is the full landed cost of one unit.
  • Price is what the customer pays before sales tax.
  • Fixed costs such as rent and salaries are not included — this is unit economics.

What this cannot tell you

  • It works on one product at a time. A business selling a mix has a blended margin that depends on what actually sells, not on the average of the list.
  • Nothing here says whether a price is achievable. A 60% margin is easy to compute and may be impossible to charge.
  • Discounts, returns and payment processing fees all reduce the real margin, and none of them are modelled.
  • It cannot cover fixed costs. A healthy margin on every unit still loses money if the volume never reaches break-even — that is the Break-Even Calculator.

Questions people ask

What is the difference between markup and margin?

Markup measures profit against what you paid; margin measures it against what you charged. A $100 item sold at $150 has a 50% markup and a 33.3% margin. The dollars are identical, the denominator is not.

How do I price for a 30% margin?

Divide the cost by 0.70, not multiply by 1.30. A $100 item needs to sell at $142.86. Multiplying gives $130 and a 23% margin, which is the mistake this calculator exists to catch.

Can margin be over 100%?

No. Margin is a share of the selling price, so 100% would mean the item cost nothing. Markup has no ceiling — a $1 item sold at $10 is a 900% markup and a 90% margin.

Which one do suppliers and retailers use?

Retailers usually think in margin, because it maps onto revenue. Suppliers and trades often quote markup, because it maps onto cost. When a number is quoted without saying which, it is worth asking.

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Sources and review

This calculator uses standard arithmetic with no external rules or published rates, so there is nothing to cite beyond the formulas shown above.

Methodology version 1.0.0 · Last reviewed