Margin and markup calculator

Margin vs markup

Both compare profit with something else. Margin is profit as a share of the selling price; markup is profit as a share of the cost. Retailers often think in markup, while accountants and investors report margin. Mixing them up is a classic pricing mistake: a 30% markup is only a 23% margin.

Worked examples

Cost $60, price $100: profit $40, margin 40 ÷ 100 = 40%, markup 40 ÷ 60 = 66.7%.

Target a 30% margin on a $70 cost: price = 70 ÷ (1 − 0.30) = $100. Adding 30% to the cost instead ($91) would give only a 23% margin.

Target a 50% markup on a $40 cost: price = 40 × 1.5 = $60, a 33.3% margin.

Conversions

• Margin = markup ÷ (1 + markup)
• Markup = margin ÷ (1 − margin)

A 100% markup (doubling the cost, "keystone" pricing) is a 50% margin.

Profit is the selling price minus the cost. The margin divides the profit by the price; the markup divides it by the cost. To find a price for a target margin, the page divides the cost by one minus the margin; for a target markup, it multiplies the cost by one plus the markup. A margin of 100% or more is impossible because profit can never exceed the price.