Profit Margin & Markup Calculator

Know exactly what you keep from each sale, and price for the margin you want.

Formulas

Profit = price − cost. Margin = profit ÷ price. Markup = profit ÷ cost. To hit a target margin: price = cost ÷ (1 − margin). Converting between the two: markup = margin ÷ (1 − margin) and margin = markup ÷ (1 + markup).

Worked example

Cost 40, price 60: profit is 20, margin is 20 ÷ 60 = 33.3%, markup is 20 ÷ 40 = 50%. To earn a 35% margin on the same cost, price = 40 ÷ 0.65 = 61.54, which is a 53.8% markup.

A common pricing mistake

Adding 35% to cost does not give a 35% margin. 40 × 1.35 = 54, and 14 ÷ 54 is only 25.9%. When a target is stated as a margin, always divide by (1 − margin) rather than multiplying by (1 + margin). Include every per-unit cost you bear, such as freight, duty, packaging, platform and payment fees, or the margin shown will be higher than what you actually keep.

FAQ

What is the difference between margin and markup?

Margin is profit as a share of the selling price; markup is profit as a share of cost. A 50% markup equals a 33.3% margin.

Can margin be over 100%?

No. Margin is capped below 100% because profit can never exceed the price. Markup has no upper limit.