Margin Calculator
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Results
Cost $60.00, price $100.00: gross margin 40%, markup 66.67%, profit $40.00.
| Margin | Markup | Price | Profit |
|---|---|---|---|
| 10% | 11.11% | $66.67 | $6.67 |
| 20% | 25% | $75.00 | $15.00 |
| 25% | 33.33% | $80.00 | $20.00 |
| 30% | 42.86% | $85.71 | $25.71 |
| 33.33% | 49.99% | $90.00 | $30.00 |
| 40% | 66.67% | $100.00 | $40.00 |
| 50% | 100% | $120.00 | $60.00 |
| 60% | 150% | $150.00 | $90.00 |
| 75% | 300% | $240.00 | $180.00 |
How to use the margin calculator
- Choose what you know: cost and price, cost and a target margin, cost and a target markup, or price and a target margin.
- Enter the amounts. Use the price before sales tax or VAT, since tax is not revenue.
- Read the margin, markup and profit, and use the table under the results to compare prices at common margins.
Margin and markup formulas
Gross margin = profit ÷ price × 100
Markup = profit ÷ cost × 100
Price for a margin = cost ÷ (1 − margin ÷ 100)
Price for a markup = cost × (1 + markup ÷ 100)
Markup = margin ÷ (100 − margin) × 100 · Margin = markup ÷ (100 + markup) × 100
Margin vs markup: what's the difference?
Both describe the same profit, measured against different bases. Margin is profit as a share of the selling price: how much of each sale you keep. Markup is profit as a share of the cost: how much you add on top of what you paid. Because the price is always larger than the cost (when you make a profit), the margin is always the smaller number. A 50% markup is only a 33.33% margin, and a 50% margin needs a 100% markup.
Margin can never reach 100% unless the cost is zero, but markup has no upper limit. Accountants and investors usually quote margin; many retailers and wholesalers price with markup. Mixing them up is one of the most common pricing mistakes.
Worked example
An item costs $60.00 and sells for $100.00. The profit is $40.00, so the gross margin is 40 ÷ 100 = 40% and the markup is 40 ÷ 60 = 66.67%. Going the other way, to make a 40% margin on a $60.00 cost you divide by 0.6 and charge $100.00. A 40% markup gives only $84.00, a 28.57% margin.
Margin to markup conversion table
| Gross margin | Equivalent markup | Price for a $100 cost |
|---|---|---|
| 5% | 5.26% | $105.26 |
| 10% | 11.11% | $111.11 |
| 15% | 17.65% | $117.65 |
| 20% | 25% | $125.00 |
| 25% | 33.33% | $133.33 |
| 30% | 42.86% | $142.86 |
| 33.33% | 49.99% | $149.99 |
| 40% | 66.67% | $166.67 |
| 50% | 100% | $200.00 |
| 60% | 150% | $250.00 |
| 70% | 233.33% | $333.33 |
| 80% | 400% | $500.00 |
| Markup | Equivalent margin | Price for a $100 cost |
|---|---|---|
| 10% | 9.09% | $110.00 |
| 20% | 16.67% | $120.00 |
| 25% | 20% | $125.00 |
| 30% | 23.08% | $130.00 |
| 40% | 28.57% | $140.00 |
| 50% | 33.33% | $150.00 |
| 75% | 42.86% | $175.00 |
| 100% | 50% | $200.00 |
| 150% | 60% | $250.00 |
| 200% | 66.67% | $300.00 |
Pricing tips
- Count the full cost. Gross margin uses the cost of the goods themselves. Shipping in, packaging and payment fees belong in the cost if you want a margin you can rely on.
- Gross is not net. Rent, wages and marketing come out of gross profit, so a business needs a gross margin well above zero just to break even.
- Discounts eat margin fast. At a 40% margin, a 20% discount cuts the margin to 25% and halves the profit per sale, so you need to sell twice as many units to earn the same profit. Try it with the discount calculator.
- Leave tax out. Sales tax and VAT are collected for the government. Work out the net price here, then add tax with the VAT or sales tax calculator.
Frequently asked questions
How do I calculate profit margin?
Subtract the cost from the selling price and divide by the selling price. An item that costs $60 and sells for $100 makes $40 profit, a 40% gross margin.
What is the difference between margin and markup?
Margin is profit divided by the selling price; markup is profit divided by the cost. The same $40 profit on a $60 cost and a $100 price is a 40% margin but a 66.67% markup.
How do I price an item for a 40% margin?
Divide the cost by 1 minus the margin. For a $60 cost, $60 ÷ 0.6 = $100. Adding 40% to the cost instead gives $84, which is only a 28.57% margin.
How do I convert margin to markup?
Markup = margin ÷ (100 − margin) × 100. A 25% margin is a 33.33% markup, and a 50% margin is a 100% markup. To go back, margin = markup ÷ (100 + markup) × 100.
Can margin be more than 100%?
No. Margin is a share of the price, so it can only reach 100% if the item costs nothing. Markup has no limit: selling a $20 item for $100 is a 400% markup but an 80% margin.