Margin and Markup Calculator
Convert between gross margin and markup, and find the selling price you need to charge to hit a target margin or markup on a given cost. Get this wrong and you underprice every single sale.
Formula and method
Profit = price − cost.
Margin % = (profit ÷ price) × 100. Markup % = (profit ÷ cost) × 100.
Price for a target margin = cost ÷ (1 − margin ÷ 100). Price for a target markup = cost × (1 + markup ÷ 100).
Worked example
A product costs you €60 and sells for €100, so profit is €40.
Margin = 40 ÷ 100 = 40%. Markup = 40 ÷ 60 = 66.67%. Same €40, two very different-looking numbers.
To reach a 40% margin from a €60 cost, price at €60 ÷ 0.6 = €100 - not €84, which is the trap a 40% markup sets.
FAQ
Frequently asked questions
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of cost. The same €40 profit on a €60 cost and €100 price gives a 40% margin but a 66.7% markup - people mix these up constantly.
How do I calculate the price I need for a target margin?
Price = cost ÷ (1 − margin ÷ 100). A €60 cost with a 40% target margin needs a €100 price, not €84 (which is what you'd get by just adding 40% markup).
Why is a 100% margin impossible?
Because it would need the cost to be zero. As your target margin creeps toward 100%, the price you'd need to charge shoots off toward infinity.
Does this include VAT?
No. Work with figures excluding VAT, then add VAT to the final selling price afterwards.
Should I price on margin or markup?
Margin is the more useful number for judging profitability, since it relates directly to revenue. Markup is often just easier to apply at the till or on a quote.
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