—
—
Margin and markup are not the same thing
Margin and markup use the same two numbers and give different answers, and confusing them quietly destroys pricing. Margin is profit as a share of the selling price; markup is profit as a share of the cost. This profit margin calculator gives you both from a cost and a selling price, alongside the profit in money, so you can price deliberately instead of by habit.
How to use the Margin Calculator
- Enter your Cost — what the item costs you.
- Enter the Selling Price you charge.
- Read profit, margin and markup together.
- Adjust the selling price until the margin hits your target.
Formula and a worked example
Profit = Price − Cost
Margin % = Profit ÷ Price × 100 · Markup % = Profit ÷ Cost × 100
Markup is always the larger number. A 50% margin is a 100% markup; a 33.3% margin is a 50% markup. To hit a target margin from a cost, use Price = Cost ÷ (1 − margin).
Worked example
An item costs 60 and sells for 100. Profit is 40, margin is 40% and markup is 66.67%. A shopkeeper who wanted a 40% return and simply added 40% to cost would have priced it at 84 — a margin of only 28.6%.
Frequently asked questions
What is the difference between margin and markup?
Margin divides profit by the selling price; markup divides it by the cost. The same trade shows a higher markup percentage than margin percentage, always.
How do I price for a target margin?
Divide cost by (1 − target margin). For a 40% margin on a cost of 60: 60 ÷ 0.6 = 100.
What is a good profit margin?
It depends entirely on the trade. Grocery retail runs on low single digits; software can exceed 80%. Compare against others in your own sector.
Is gross margin the same as net margin?
No. Gross margin counts only the direct cost of the goods. Net margin also subtracts rent, salaries, marketing and tax.
Related calculators
Other tools people use alongside the margin calculator.