Margin & Markup Calculator
Calculate profit margin, markup percentage, and required selling price from cost.
Profit: 100.00 price − 60.00 cost = 40.00 profit
Margin: 40.00 profit ÷ 100.00 price = 40%
Markup: 40.00 profit ÷ 60.00 cost = 66.67%
Margin is calculated as a percentage of the selling price, while markup is calculated as a percentage of the cost.
Calculate profit margins, markups, and required selling prices to make informed business pricing decisions.
Margin vs. Markup Explained
While both metrics describe the profitability of a transaction, they use different baselines:
- Profit Margin measures the percentage of the selling price that turns into profit. It answers: “Out of every dollar collected, how much is profit?”
- Markup measures the percentage added to the cost to reach the selling price. It answers: “How much did I mark up my cost to set the price?”
Because selling price is higher than cost (for profitable sales), margin is always smaller than markup for the same dollar profit. For example, a 40% margin requires a 66.67% markup.
Formulas & Methodology
1. Analyze Price
Given Cost and Selling Price:
- Profit per Unit:
Selling Price - Cost - Margin Percentage:
(Profit ÷ Selling Price) × 100 - Markup Percentage:
(Profit ÷ Cost) × 100
2. Price from Target Margin
Given Cost and Target Margin %:
- Required Selling Price:
Cost ÷ (1 − (Target Margin % ÷ 100)) - Profit per Unit:
Selling Price - Cost - Equivalent Markup:
(Profit ÷ Cost) × 100
3. Price from Target Markup
Given Cost and Target Markup %:
- Required Selling Price:
Cost × (1 + (Target Markup % ÷ 100)) - Profit per Unit:
Selling Price - Cost - Equivalent Margin:
(Profit ÷ Selling Price) × 100
Worked Acceptance Examples
1. Price Analysis
- Cost: 60.00
- Selling Price: 100.00
- Profit:
100 - 60 = 40.00 - Profit Margin:
(40 ÷ 100) × 100 = 40.00% - Markup:
(40 ÷ 60) × 100 = 66.67%
2. Target Margin Pricing
- Cost: 90.00
- Target Margin: 25%
- Selling Price:
90 ÷ (1 - 0.25) = 120.00 - Profit:
120 - 90 = 30.00
3. Target Markup Pricing
- Cost: 80.00
- Target Markup: 50%
- Selling Price:
80 × (1 + 0.50) = 120.00 - Profit:
120 - 80 = 40.00
Frequently Asked Questions
What is the difference between profit margin and markup?+
Profit margin is profit expressed as a percentage of the selling price (Profit ÷ Selling Price × 100). Markup is profit expressed as a percentage of the original cost (Profit ÷ Cost × 100). Because margin divides profit by the higher selling price, margin percentage is always lower than markup percentage for the same product.
How do you calculate selling price from a target margin?+
Divide the cost by (1 − Margin %). For example, if an item costs 90 and you want a 25% profit margin, the selling price is 90 ÷ (1 − 0.25) = 120.
How do you calculate selling price from a target markup?+
Multiply the cost by (1 + Markup %). For example, if an item costs 80 and you apply a 50% markup, the selling price is 80 × (1 + 0.50) = 120.
Why can markup be over 100% while margin cannot?+
Markup represents how much you add on top of your cost, so a 200% markup on a 10 item means selling it for 30 (adding 20 profit). Margin represents what fraction of the total sale is profit, which cannot reach or exceed 100% unless costs are zero or negative.