Free tool · Pricing
Markup and margin calculator
Type any two of cost, selling price, markup or margin and the other two fill in. Then check the table below before you set your prices. Runs in your browser; nothing is saved.
Enter any two
The two you typed last are kept; the other two are worked out.
Result
Cost
$60.00
Selling price
$100.00
Gross profit per unit
$40.00
Markup (profit ÷ cost)
66.67%
Margin (profit ÷ price)
40%
Markup is profit as a share of cost; margin is profit as a share of the selling price. Works in any currency. Taxes and discounts are left out.
The formulas
- Profit = price − cost
- Markup = profit ÷ cost
- Margin = profit ÷ price
- Price from cost and markup = cost × (1 + markup)
- Price from cost and margin = cost ÷ (1 − margin)
- Margin from markup = markup ÷ (1 + markup); markup from margin = margin ÷ (1 − margin)
Markup to margin conversion table
| Markup | Margin | Price of a $100 cost item |
|---|---|---|
| 10% | 9.09% | $110.00 |
| 15% | 13.04% | $115.00 |
| 20% | 16.67% | $120.00 |
| 25% | 20% | $125.00 |
| 30% | 23.08% | $130.00 |
| 40% | 28.57% | $140.00 |
| 50% | 33.33% | $150.00 |
| 60% | 37.5% | $160.00 |
| 75% | 42.86% | $175.00 |
| 100% | 50% | $200.00 |
| 150% | 60% | $250.00 |
| 200% | 66.67% | $300.00 |
| 300% | 75% | $400.00 |
A useful pair to remember: 100% markup (doubling the cost, "keystone" pricing in retail) is a 50% margin.
Which one should you use?
Use markup when you build a price up from cost: a contractor adding 20% to materials, a shop doubling its wholesale price. Use margin when you look at results: your profit and loss shows gross profit as a share of sales, which is margin. Mixing them up is how a business that "adds 30%" ends up with a 23% margin and wonders why the numbers don't work.
Remember that cost should include everything it takes to get the item to the customer: freight in, packaging, card fees if you price them in. For inventory, how you value cost matters too; see FIFO vs average cost.
Questions
What is the difference between markup and margin?
Both measure the same profit, against a different base. Markup is profit divided by cost; margin is profit divided by the selling price. An item that costs $60 and sells for $100 has a $40 profit: a 66.67% markup and a 40% margin.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup is 0.5 ÷ 1.5 = 33.33% margin. To go the other way, markup = margin ÷ (1 − margin): a 25% margin is 0.25 ÷ 0.75 = 33.33% markup.
How do I price for a target margin?
Divide the cost by 1 minus the margin. For a 40% margin on a $30 cost: $30 ÷ 0.60 = $50. Adding 40% to the cost ($42) would only give a 28.6% margin, the most common pricing mistake.
Can margin be more than 100%?
No. Margin is a share of the price, so it can approach 100% but never reach it while there is any cost. Markup has no upper limit: a $5 item sold for $50 has a 900% markup and a 90% margin.
What is a good profit margin?
It depends entirely on the industry and on what the margin covers. Gross margin (price minus product cost) is much higher than net margin (after rent, wages and every other expense). Compare with your own past results and with businesses like yours, and make sure gross profit covers your fixed costs: the break-even calculator shows how much it needs to.
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Related
- All free tools
- Break-even calculator
- Free invoice generator
- Accounting software for retail
- Budget vs actual reports
General information, not financial advice.
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