How to use this calculator
- Choose what you know: cost and price, cost and target margin, or cost and target markup.
- Enter the cost of the product or service.
- Enter the selling price, or the margin or markup percentage you want.
Formula
Margin and markup both measure profit but relative to different bases: margin divides by revenue, markup divides by cost. A 50% markup is only a 33.3% margin.
Profit = price − cost
Margin = profit / price × 100
Markup = profit / cost × 100
Price for target margin = cost / (1 − margin)
Example
- Cost $60, price $100 → profit $40.
- Margin = 40 / 100 = 40%.
- Markup = 40 / 60 = 66.67%.
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 cost. Retailers often talk in markup; financial statements report margin.
Can margin exceed 100%?
No. Margin approaches 100% as cost approaches zero, but can never reach it. Markup has no upper limit.
Is this gross or net margin?
Gross margin, based only on the direct cost of goods. Net margin also subtracts operating expenses, interest and taxes.