Markup vs Margin Calculator

What the markup vs margin calculator does

Markup and margin are easily confused, and pricing a product with the wrong one erodes profit. Enter a unit cost and a selling price, and the calculator reports the profit margin, the markup, and the cash profit per unit, with a donut chart that splits the selling price into the cost you recover and the profit you keep. Each result is labelled, so you do not have to remember which base goes with which name.

The core difference

Markup and margin describe the same profit measured against different bases.

• Margin is profit as a share of the selling price. If you sell for 100 and keep 40, your margin is 40%.
• Markup is that same 40 of profit as a share of the cost. If the item cost 60, the markup is 40 ÷ 60 = 66.67%.

The money you keep is identical; only the reference point changes. For a profitable sale the cost is smaller than the price, so markup is always the larger percentage.

The formula

• Profit = selling price − unit cost
• Margin % = profit ÷ selling price × 100
• Markup % = profit ÷ unit cost × 100

No tax, overhead or external rate enters the calculation, so the same cost and price give the same answer in every country and currency.

A worked example

A shop buys a product for 60 and sells it for 100, a profit of 40 per unit. Dividing 40 by the price of 100 gives a 40% margin; dividing it by the cost of 60 gives a 66.67% markup. A shopkeeper who applies a 40% markup when they meant a 40% margin sells the item for 84 instead of 100, earning 24 in place of 40 and giving up 40% of the intended profit on every sale.

Converting between the two

• Markup to margin: margin = markup ÷ (1 + markup). A 50% markup is 0.5 ÷ 1.5 = 33.3% margin.
• Margin to markup: markup = margin ÷ (1 − margin). A 25% margin is 0.25 ÷ 0.75 = 33.3% markup.

A 50% markup and a 33.3% margin are the same deal, and so are a 25% margin and a 33.3% markup.

Which figure to use

• Use markup when you build a price. Retailers and wholesalers usually start from a supplier cost and add a percentage on top, which is exactly what markup measures.
• Use margin when you judge profitability. Accountants, lenders and investors think in margin because it shows how much of each unit of revenue remains after the cost of the goods, and it is comparable across products and industries.

A common approach is to price up using a target markup, then check the resulting margin against your business's benchmark, raising the markup if the margin is too thin.

Common mistakes

A "40% product" means very different things depending on whether that 40% is a margin or a markup, and the gap widens as the percentage grows. At 20% the two figures are fairly close; by 50% they diverge sharply, and a 50% margin already needs a 100% markup. Quoting a markup to a customer or partner who reads it as a margin can also make a deal look far more generous than it is.

Testing scenarios

Enter the cost and price in the same currency. Raise the price by a small amount and watch the markup climb faster than the margin. Set the cost close to the price to see how thin margins look, then widen the gap to see what a healthy split looks like in your line of work.

About This Markup vs Margin Calculator

Use this markup vs margin calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.