Margin & Markup Calculator
Set the right selling price for your product and see margin and markup side by side.
Margin is profit as a share of the selling price. Must be under 100%.
Selling Price
Margin
40.0%
Markup
66.7%
A 50% markup is only a 33.3% margin — they are never the same number.
A 50% markup is not a 50% margin — it is a 33.3% margin. Confusing these two is one of the most expensive mistakes in small business, and it happens constantly. This calculator shows both numbers side by side so you can never mix them up again.
The difference that costs money
Both measure profit, but against different bases. Markup is profit as a share of your cost. Buy for $100, sell for $150, and your markup is 50% — the $50 profit compared to the $100 you spent. Margin is profit as a share of your selling price. Same numbers: $50 profit on a $150 sale is a 33.3% margin. Same transaction. Two completely different percentages. And here is where it gets expensive: a business owner who wants a 40% margin but applies a 40% markup will price at $140 instead of $166.67. They have quietly given away 16% of their revenue on every unit sold — and if their overheads assumed a 40% margin, they are now losing money on volume. Margin can never reach 100%. Markup can go to any number at all.
The formulas
Markup% = (Price − Cost) ÷ Cost × 100
Margin% = (Price − Cost) ÷ Price × 100
Price from margin: Price = Cost ÷ (1 − Margin%)
Price from markup: Price = Cost × (1 + Markup%)
Example: cost $100
50% markup → $150 (margin = 33.3%)
50% margin → $200 (markup = 100%)Look at that example carefully. The same '50%' produces a $150 price or a $200 price depending on which word you used. That is a $50 difference per unit from a single word.
Pricing without losing money
- 1Decide in margin, not markup. Margin is what your accountant, your P&L, and your investors speak. Markup is a shop-floor shortcut. Thinking in margin keeps you aligned with the numbers that decide whether the business works.
- 2Learn the pairs: 25% margin is a 33% markup. 33% margin is a 50% markup. 50% margin is a 100% markup. 60% margin is a 150% markup. If you sell physical goods, these are worth memorising.
- 3Include every cost in your cost, not just the purchase price. Shipping, payment processing, packaging, returns, and storage all belong there. A 40% margin on the wholesale price alone can be a 10% margin in reality.
- 4Watch what discounts do to margin. On a 30% margin, a 20% discount does not cost you 20% of profit — it costs you two thirds of it. Discounting eats margin far faster than intuition suggests.
- 5Retail conventions vary and are worth knowing. Grocery runs on 2–5% net margin at enormous volume; software runs on 80%+. Comparing your margin to the wrong industry tells you nothing useful.
Frequently asked questions
Which should I use, margin or markup?
Margin, for decisions. It tells you what share of your revenue you actually keep, which is the number that has to cover your rent, salaries, and everything else. Markup is a convenient way to set prices from cost, but margin is what determines whether you survive.
Can margin be over 100%?
No, never. Margin is profit divided by price, and profit cannot exceed the price. A 100% margin would mean the item cost you nothing. Markup has no ceiling — a $1 item sold for $100 is a 9,900% markup.
Why does my 50% markup only give a 33% margin?
Because they measure against different bases. Cost $100, sell $150. The $50 profit is 50% of the $100 cost (markup) but only 33.3% of the $150 price (margin). Same profit, different denominators.
What is a good margin?
Entirely industry-dependent. Grocery: 2–5% net. Restaurants: 3–9%. Retail: 20–50% gross. Software: 80%+. Consulting: 20–40%. Compare within your industry — a 20% margin is excellent in one and fatal in another.
How do I hit a specific margin?
Divide your cost by (1 minus the margin as a decimal). For a 40% margin on a $60 cost: 60 ÷ 0.6 = $100. Set this calculator to 'Margin %' mode and it does exactly that.