Margin and markup calculator

Work out profit, margin and markup from your cost and price, or find the price that earns the margin you want.

Margin and markup both describe profit, but they divide it by different things. Margin divides profit by the selling price, so it tells you how much of every sale you keep. Markup divides profit by the cost, so it tells you how much you add on top of what you paid.

A 50% markup is not a 50% margin. Adding 50% to a cost of 60 gives a price of 90 and a margin of only 33.3%. If you want a 50% margin on a cost of 60, the price has to be 120, which is a 100% markup. Pricing from the wrong one is a common reason shops earn less than they planned.

Use the reference table under the calculator to see the price, markup and profit for the common margin targets on your cost.

The formulas

• Profit = selling price − cost
• Margin % = profit ÷ selling price × 100
• Markup % = profit ÷ cost × 100
• Price for a target margin = cost ÷ (1 − margin)
• Price for a target markup = cost × (1 + markup)

A worked example

An item costs 60 and sells for 100. Profit is 40. Margin is 40 ÷ 100 = 40%. Markup is 40 ÷ 60 = 66.7%. The same 40 of profit is a 40% margin but a 66.7% markup, which is why the two are so often mixed up.

Frequently asked questions

What is the difference between margin and markup?

Margin is profit as a share of the selling price. Markup is profit as a share of the cost. For the same profit, markup is always the bigger number, because the cost is smaller than the price.

How do I calculate a selling price from a margin?

Divide the cost by one minus the margin as a decimal. For a cost of 60 and a 40% margin, the price is 60 ÷ 0.6 = 100.

How do I convert a margin to a markup?

Divide the margin by one minus the margin. A 40% margin is 0.4 ÷ 0.6 = 66.7% markup. A 50% margin is a 100% markup.

Should the price include tax?

No. Use the price before sales tax, VAT or GST, because that tax is collected for the government and is not yours to keep. Use the cost before tax too if you can reclaim the tax you pay on purchases.

What is a good profit margin for a shop?

It depends on the kind of shop. Grocery margins are often in the teens or low twenties of the selling price, while clothing, gifts and accessories are often much higher. Compare your gross margin with shops like yours rather than a single number.