Margin & Markup Calculator
Calculate profit margin and markup from cost and price, or work backward from a target margin or markup to find the price you need to charge.
The margin and markup formulas
For example, a $40.00 item sold for $60.00 gives a profit of $20.00 — a 33.3% margin and a 50.0% markup.
Frequently asked questions
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price (profit ÷ price). Markup is profit as a percentage of cost (profit ÷ cost). For the same item, markup is always a larger number than margin — a 50% markup on a $40 cost gives a $60 price, which is only a 33.3% margin.
Why does a 50% markup not equal a 50% margin?
Markup is calculated on cost, margin on price — and price is always larger than cost when there's a profit. A 100% markup (doubling the cost) is only a 50% margin, which trips up a lot of people pricing products for the first time.
How do I set a price to hit a target margin?
Use price = cost ÷ (1 − target margin). For example, to achieve a 40% margin on a $30 cost: $30 ÷ (1 − 0.40) = $50. Selling at $50 gives a $20 profit, which is exactly 40% of the $50 price.
Which one should I use to price my products — margin or markup?
Margin is usually more useful for profitability analysis, since it directly tells you what percentage of revenue is profit. Markup is often more intuitive when pricing from cost — e.g. 'I add 50% on top of what I paid.' Many retailers use both, depending on the conversation.