Profit Margin and Markup Calculator

What is profit margin and markup calculator?

Margin and markup are two ways to describe profit, and they are often confused. A product that costs 60 and sells for 100 has a markup of 66.7 percent but a margin of 40 percent.

Sellers use margin to see how much of each sale is profit, and markup to set prices from cost. This calculator shows both, and can also work out the price you need to hit a margin target.

How to use the profit margin and markup calculator

1. Choose whether you know the price or have a target margin.
2. Enter your cost, and either the price or the margin target.
3. Read the margin, markup, profit per unit or the price to charge.

How the profit margin and markup calculator works

Margin equals price minus cost, divided by price, times 100. Markup equals price minus cost, divided by cost, times 100. For a target margin, price equals cost divided by one minus the margin as a fraction.

Worked example

Common uses of the profit margin and markup calculator

• Pricing products for an online shop.
• Checking if a supplier quote leaves enough profit.
• Comparing profitability across products.
• Setting service prices from hourly costs.
• Explaining margin to a new team member.

Tips and common mistakes

Do not add the margin percentage to the cost. A 40 percent markup is not a 40 percent margin.

Include shipping, fees and returns in your cost to avoid overstating profit.

Background: what to know before you rely on it

Mixing up margin and markup is one of the most common pricing errors in small business. A retailer who wants a 50 percent margin but applies a 50 percent markup ends up with only a 33 percent margin. The reason is the base: margin is measured against the price and markup against the cost, so the same profit gives a smaller margin percentage than markup percentage. Margins vary by industry. Grocery margins are often low, while software margins can be very high. To judge a business properly, look at gross margin, operating margin and net margin, and keep in mind that discounts, returns and fees all reduce the real number.

Private, free and fast

This tool runs entirely in your browser. What you type or choose is not uploaded to a server and is not saved after you close the page, which keeps it fast and private. It is free to use as often as you like. See more in all finance calculators, or browse the full list of tools.

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Results are for information and education. For legal, financial, medical or security decisions, check with a qualified professional. Estimates only. Confirm with your lender or accountant.