Margin and markup calculator
Enter what an item costs you and what you sell it for to see the profit, the margin and the markup. Or start from a target margin or markup and get the selling price.
Runs in your browser: nothing you enter is sent anywhere.
How to use it
- Choose what you know: the cost and the price, the cost and a target margin, or the cost and a markup.
- Enter the numbers.
- Read the profit, the margin and the markup, or the selling price you need.
Margin vs markup
|
Formula |
Cost 60, price 100 |
| Profit |
price − cost |
40 |
| Margin |
profit ÷ price × 100 |
40% |
| Markup |
profit ÷ cost × 100 |
66.67% |
| Price from margin |
cost ÷ (1 − margin ÷ 100) |
60 ÷ 0.6 = 100 |
| Price from markup |
cost × (1 + markup ÷ 100) |
60 × 1.5 = 90 |
Margin answers “how much of each sale is profit?”. Markup answers “how much did I add on top of my cost?”. The same deal always has a lower margin than markup.
Worked example
A shop buys a lamp for 60 and wants a 40% margin. Adding 40% to the cost gives 84, which is only a 28.6% margin. The right price is 60 ÷ (1 − 0.40) = 100: the profit of 40 is 40% of the price.
Common mistakes
- Treating margin and markup as the same. Quoting a 50% markup when the target was a 50% margin leaves you at 33.33%.
- Leaving costs out. Shipping, payment fees and packaging belong in the cost.
- Including VAT. Use prices without VAT on both sides.
Frequently asked questions
What is the difference between margin and markup?
Both compare profit with something else. Margin compares it with the selling price, markup with the cost. Buying at 60 and selling at 100 gives a profit of 40, a 40% margin (40 ÷ 100) and a 66.67% markup (40 ÷ 60).
How do I calculate a selling price from a target margin?
Divide the cost by (1 − margin ÷ 100). For a 40% margin on a cost of 60, the price is 60 ÷ 0.6 = 100.
Why can a markup be over 100% but a margin cannot?
Profit can be several times the cost, so markup has no upper limit. But profit is always less than the price as long as the item cost something, so margin stays below 100%.
How do I convert markup to margin?
margin = markup ÷ (100 + markup) × 100. A 50% markup is a 50 ÷ 150 = 33.33% margin. The other way, markup = margin ÷ (100 − margin) × 100.
Should VAT be included?
No. Use the cost and price without VAT, because VAT is passed on to the tax authority and is not part of your profit.