Margin & Markup Calculator
- Selling price
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- Profit
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- Gross margin
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- Markup
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Checked against: Cost 60, price 100: profit 40, margin 40%, markup 66.67% Last reviewed:
Sources and method
An illustration for general information, not financial advice, a quotation or an offer of credit. Figures from a lender or employer will differ.
Gross margin is profit divided by the selling price; markup is profit divided by the cost. Buy at 60 and sell at 100, and the profit of 40 is a 40% margin but a 66.7% markup.
Margin and markup describe the same profit from two directions, and confusing them is one of the most expensive mistakes in small-business pricing. If you want a 40% margin and add 40% to your cost, you end up with a 28.6% margin. Enter a cost and a price to see both figures, or set the margin or markup you want and get the selling price that delivers it.
The formulas
Profit = Selling price − Cost
Gross margin = Profit ÷ Selling price × 100
Markup = Profit ÷ Cost × 100
And to set a price:
Price for a target margin = Cost ÷ (1 − Margin ÷ 100)
Price for a target markup = Cost × (1 + Markup ÷ 100)
Worked examples
Margin and markup from cost and price
A café pays 1.20 for the ingredients in a sandwich and sells it for 4.50. Profit is 3.30. Margin is 3.30 ÷ 4.50 = 73.3%. Markup is 3.30 ÷ 1.20 = 275%. Same sandwich, same profit, very different-looking numbers.
Pricing for a target margin
A reseller buys a product for 35 and wants a 40% gross margin. Price = 35 ÷ 0.60 = 58.33. Check: profit 23.33 ÷ 58.33 = 40%. Adding 40% to cost would have given 49, a margin of only 28.6%.
Pricing from a standard markup
A trade supplier adds a 25% markup to everything. An item costing 80 sells for 80 × 1.25 = 100, which is a 20% margin. A 25% markup always means a 20% margin, whatever the cost.
Converting between markup and margin
Because they share the same profit, either figure can be converted to the other without knowing the price:
Margin = Markup ÷ (1 + Markup) Markup = Margin ÷ (1 − Margin)
(Use decimals: 50% is 0.5.)
| Markup on cost | Gross margin | Price = cost × |
|---|---|---|
| 10% | 9.1% | 1.1000 |
| 20% | 16.7% | 1.2000 |
| 25% | 20.0% | 1.2500 |
| 30% | 23.1% | 1.3000 |
| 33.33% | 25.0% | 1.3333 |
| 40% | 28.6% | 1.4000 |
| 50% | 33.3% | 1.5000 |
| 60% | 37.5% | 1.6000 |
| 75% | 42.9% | 1.7500 |
| 100% | 50.0% | 2.0000 |
| 150% | 60.0% | 2.5000 |
| 200% | 66.7% | 3.0000 |
What price hits your target margin?
| Target margin | Selling price | Profit | Markup needed |
|---|---|---|---|
| 10% | 111.11 | 11.11 | 11.1% |
| 20% | 125.00 | 25.00 | 25.0% |
| 25% | 133.33 | 33.33 | 33.3% |
| 30% | 142.86 | 42.86 | 42.9% |
| 35% | 153.85 | 53.85 | 53.8% |
| 40% | 166.67 | 66.67 | 66.7% |
| 50% | 200.00 | 100.00 | 100.0% |
| 60% | 250.00 | 150.00 | 150.0% |
| 70% | 333.33 | 233.33 | 233.3% |
| 80% | 500.00 | 400.00 | 400.0% |
The pattern is worth noticing: going from a 50% to a 60% margin needs the markup to rise from 100% to 150%. High margins are much harder to reach than they look.
Why discounts hurt margin more than you expect
A discount comes entirely out of profit. On an item with a 30% margin, a 10% discount removes a third of the profit; a 20% discount removes two thirds. To keep the same total profit after a 10% discount at a 30% margin, you would need to sell 50% more units. Run any discount through the discount calculator, then back through this one with the new price.
Common mistakes
- Adding the target margin to cost. A 30% margin needs cost ÷ 0.70, not cost × 1.30.
- Comparing your markup with a competitor’s margin. Industry benchmarks are almost always quoted as gross margin.
- Using the tax-inclusive price. Work out margin on the net price. VAT or GST collected is not your revenue — see the GST calculator or the reverse percentage calculator to strip it out.
- Leaving out landed costs. Shipping, import duty, card fees and packaging belong in the cost figure.
This calculator gives gross figures for a single item or order. It is an illustration for planning, not accounting or tax advice.
Frequently asked questions
What is the difference between margin and markup?
Both measure the same profit, against different bases. Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. Buy at 60, sell at 100: the profit of 40 is a 66.7% markup but a 40% margin.
How do I calculate profit margin?
Gross margin = (Selling price − Cost) ÷ Selling price × 100. A product that costs 30 and sells for 50 has a margin of 20 ÷ 50 = 40%.
How do I set a price to get a 30% margin?
Divide the cost by 1 minus the margin: Price = Cost ÷ (1 − 0.30). A cost of 70 needs a price of 100. Adding 30% to the cost gives only 91, which is a 23.1% margin.
How do I convert markup to margin?
Margin = Markup ÷ (1 + Markup). A 50% markup is 0.5 ÷ 1.5 = 33.3% margin. Going the other way, Markup = Margin ÷ (1 − Margin), so a 50% margin needs a 100% markup.
Can a margin be more than 100%?
No. Margin is profit as a share of the selling price, and profit can never exceed the price, so gross margin tops out just below 100%. Markup has no ceiling: selling at 10 times cost is a 900% markup.
Is gross margin the same as net margin?
No. Gross margin only subtracts the direct cost of the goods. Net margin also subtracts rent, wages, marketing, interest and tax, so it is always lower. This calculator works out gross margin on a single item or order.
What is keystone pricing?
Doubling the wholesale cost to set the retail price. It is a 100% markup and a 50% margin, and it is a long-standing rule of thumb in retail.