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Margin and Markup Calculator

With what it cost you 60 usd, what you sell it for 100 usd, or a margin you want 50 percent, margin and markup comes to 40.00 % — margin. It is reached in 6 steps, the last of which is 40 / 100 * 100, and each one is printed on the page with its numbers filled in. The formula is the one published by US Small Business Administration, not an approximation fitted to it.

Margin and markup from cost and price — the two are not the same number, and the page shows both every time.

Formula and sources checked · How we check

What it cost you 60, What you sell it for 100, Or a margin you want 50

40.00 %

Margin for the example below. Editing a field recomputes the calculator below; this figure holds the answer the page was loaded with.

It is written into the HTML rather than drawn by a script, so a search engine reading this page without running JavaScript still finds an answer.

Margin
40.00 %
Profit per unit
100 - 60$40
Margin — profit over price
40 / 100 * 10040 %
Markup — profit over cost
40 / 60 * 10066.667 %
Price that gives the target margin
60 / (1 - 50 / 100)$120
The markup that same margin means
50 / (100 - 50) * 100100 %
Units to cover $1,000 of overhead
ceil(1000 / 40)25

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Worked example

Buying at $60 and selling at $100 is a 40% margin and a 66.67% markup — the same $40 of profit measured against two different denominators. Pricing "at 40% markup" instead would have given $84 and a margin of only 28.6%.

How to work it out yourself

  1. 1.Enter cost and price to see both figures. If a supplier or a manager quotes one, ask which — the answer changes the price by a lot.
  2. 2.To price from a target margin, set the margin you want and read the price line. Dividing by one minus the margin is the correct operation; multiplying the cost by one plus the margin is the common mistake.
  3. 3.Check the break-even line when overhead matters. Margin percentage means nothing until it is multiplied by volume.

The same margin, as a markup

The same margin, as a markup
Or a margin you want (percent)MarginThe markup that same margin meansPrice that gives the target margin
540.00 %5.26 %$63
1040.00 %11.11 %$67
1540.00 %17.65 %$71
2040.00 %25 %$75
2540.00 %33.33 %$80
3040.00 %42.86 %$86
4040.00 %66.67 %$100
5040.00 %100 %$120
6040.00 %150 %$150
7040.00 %233.33 %$200
8040.00 %400 %$300

On a cost of $60.

The formula

  1. Profit per unit100 - 60
  2. Margin — profit over price40 / 100 * 100
  3. Markup — profit over cost40 / 60 * 100
  4. Price that gives the target margin60 / (1 - 50 / 100)
  5. The markup that same margin means50 / (100 - 50) * 100
  6. Units to cover $1,000 of overheadceil(1000 / 40)

Source: US Small Business Administration — calculate your startup costs and pricing

Questions people actually ask

What is the difference between margin and markup?
The denominator. Margin divides profit by the selling price; markup divides the same profit by the cost. A $40 profit on a $60 item sold at $100 is a 40% margin and a 66.67% markup. They coincide only at zero, and the gap grows quickly — a 50% markup is a 33.3% margin, and a 100% markup is a 50% margin.
How do I price for a target margin?
Divide the cost by one minus the margin. For a 50% margin on a $60 cost: 60 ÷ 0.5 = $120. Adding 50% to the cost gives $90, which is a 33% margin — the mistake costs $30 a unit here, and it is the most common pricing error in small businesses.
Which one do retailers use?
Both, in different rooms. Buyers and suppliers usually talk in markup because they start from cost; finance and investors talk in margin because they start from revenue and it is what appears on an income statement. A conversation where one side means each is how a deal ends up unprofitable on paper.
Can margin be more than 100%?
No. Margin is profit as a share of the price, so it approaches 100% as cost approaches zero and can never exceed it. Markup has no ceiling: an item costing $1 sold for $100 is a 9,900% markup, and its margin is a fraction under the hundred per cent ceiling. A quoted "300% margin" is a markup being called the wrong thing.

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