Margin and markup calculator
Pick the two numbers you know (cost and price, cost and margin, price and markup, and so on) and get the rest: cost, selling price, profit, margin and markup. A side-by-side table shows how the same price looks as a margin and as a markup, because mixing them up is the classic pricing mistake. A separate small card shows the effect of a discount and sales tax.
Result
- Cost
- $80.00
- Selling price
- $106.67
- Profit
- $26.67
- Margin
- 25%
- Markup
- 33.34%
Money is rounded to the cent first, then the percentages are worked out from those cents. So the second percentage can differ in the last digit: 80.00 at a 25% margin sells for 106.67, which is a 33.34% markup, not exactly 33.33%.
The formulas
- Profit = price - cost
- Margin = profit / price
- Markup = profit / cost
- Markup = margin / (1 - margin)
- Margin = markup / (1 + markup)
Margin and markup side by side
| Margin | Markup to get it |
|---|---|
| 10% | 11.11% |
| 20% | 25% |
| 25% | 33.33% |
| 30% | 42.86% |
| 40% | 66.67% |
| 50% | 100% |
| 60% | 150% |
| 70% | 233.33% |
| 75% | 300% |
| 80% | 400% |
| Markup | Margin you get |
|---|---|
| 10% | 9.09% |
| 25% | 20% |
| 50% | 33.33% |
| 75% | 42.86% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.67% |
| 300% | 75% |
A 50% margin is a 100% markup: the price is double the cost. Mixing the two up is the classic pricing mistake.
Discount and tax (separate small calculation)
Shows what a discount and sales tax do to a price, and, if you enter your cost, how much margin is left after the discount.
- Discount
- $15.00
- Price after discount
- $85.00
- Tax
- $7.01
- Customer pays
- $92.01
- Margin at list price
- 40%
- Margin after discount
- 29.41%
How it works
- •Choose which two values you know from the list, then type them in.
- •Read the cost, price, profit, margin and markup. Margin is profit divided by the price; markup is profit divided by the cost.
- •Use the table to convert quickly: a 50% margin is a 100% markup, and a 25% margin is a 33.33% markup.
- •In the discount card enter a list price, a discount and a tax rate to see the price the customer pays. Add your cost to see how much margin is left after the discount.
What it does and what it cannot do
- •This is a planning estimate, not financial or accounting advice. Margin here is gross margin: price minus cost of the item only.
- •It does not include overheads, shipping, fees, returns or taxes you pay yourself; add those to the cost if they belong to each sale.
- •Money is rounded to the cent, then the percentages are worked out from the rounded cents, so tiny rounding differences are normal.
- •A margin must be below 100%. Markup can be any size. Selling below cost shows negative results.
- •Sales tax in the discount card is added on top of the discounted price and is not part of your margin. Nothing you type is sent anywhere.
Questions
- What is the difference between margin and markup?
- Both describe the same profit, but against different bases. Margin is profit divided by the selling price. Markup is profit divided by the cost. Cost 80 and price 100: profit is 20, margin 20%, markup 25%.
- How do I convert markup to margin?
- Margin = markup / (1 + markup). A 50% markup is a 33.33% margin. The other way, markup = margin / (1 - margin): a 25% margin is a 33.33% markup.
- How do I price an item for a target margin?
- Divide the cost by (1 - margin). Cost 80 for a 25% margin gives 80 / 0.75 = 106.67. Choose cost and margin in the list.
- How do I price an item with a markup?
- Multiply the cost by (1 + markup). Cost 80 with a 40% markup gives 112.00.
- Why can the margin never be 100%?
- A 100% margin means the cost is zero. As markup grows without limit, margin only gets closer to 100%: a 900% markup is a 90% margin.
- What does a discount do to my margin?
- It cuts it faster than most people expect, because the cost stays the same. A 100 item costing 60 has a 40% margin; at 15% off it sells for 85 and the margin drops to 29.41%.