Enter your cost and selling price to see the profit, markup percentage, and margin percentage, two figures that are easy to mix up.
Cost ($):
Selling price ($):
How It Works
Markup is profit expressed as a percentage of cost, while margin is the same profit expressed as a percentage of the selling price. They use the same profit figure but different denominators, which is why they are never the same number.
How to Use This Tool
- Enter what the item costs you.
- Enter the price you sell it for.
- Click Calculate to see profit, markup, and margin.
Confusing markup with margin is a common pricing mistake; a 50% markup on cost is only a 33.3% margin on the selling price, not 50%.
The Formulas
- Profit = selling price − cost
- Markup % = profit ÷ cost × 100
- Margin % = profit ÷ selling price × 100
Worked example: an item costs 50 and sells for 80. Profit is 30. Markup is 30 ÷ 50 = 60%. Margin is 30 ÷ 80 = 37.5%. Same profit, two different percentages.
Converting Between Markup and Margin
A common mistake is to set a price by adding your target margin percentage to cost. If you want a 40% margin, adding 40% to cost gives you only about a 28.6% margin. To hit a target margin, divide cost by (1 − margin). With a cost of 60 and a target margin of 40%, the price is 60 ÷ 0.60 = 100, which leaves 40 in profit, exactly 40% of the price.
Going the other way, margin = markup ÷ (1 + markup) when both are written as decimals. A 100% markup (price is double the cost) is a 50% margin, and a 25% markup is a 20% margin.
Did You Know?
- Margin can never reach 100%, since selling price always includes the cost, but markup has no such ceiling.
- Retailers commonly plan pricing around a target margin percentage rather than a markup percentage, since margin ties directly to revenue.
Frequently Asked Questions
Which one should I use for pricing decisions?
Margin is usually more useful for financial planning since it is a percentage of revenue, but markup is often easier to apply directly at the point of setting a price from cost.
Why is my markup percentage always higher than my margin percentage?
Because markup divides profit by the smaller number (cost) while margin divides the same profit by the larger number (selling price), markup will always be numerically higher whenever there is a profit.
How do I price an item to hit a target margin?
Divide your cost by (1 minus the margin as a decimal). For a 30% margin, divide cost by 0.70. Enter the resulting price into this calculator to confirm the margin.
Does this include taxes, shipping, or fees?
No. The calculator uses only the two numbers you enter. If you pay marketplace fees, shipping, or other per-item costs, add them to your cost first to see your true margin. This is a general calculator and not accounting advice.