Margin and markup describe the same profit in two different ways, and mixing them up is a common way to underprice a job. This calculator works either direction: enter a cost and a selling price to see both percentages, or start from a target margin and see what you would need to charge.
Margin and markup calculator
Work out gross profit, margin and markup from a cost and a selling price, or start from the margin you want and see what you would have to charge.
Breakdown
Enter a cost and a selling price to see the gross profit, margin and markup.
See a worked example
An item that costs 60.00 and sells for 100.00
Same 40.00 of profit, two very different percentages. The margin is measured against the 100.00 you took, the markup against the 60.00 you spent.
Working back from a target margin of 40% on a cost of 60.00
Note what you cannot do: adding 40% to the 60.00 cost gives 84.00, which is only a 28.57% margin. To hit a margin you have to divide, not add.
Everything here is worked out in your browser. The figures you type are not sent to us, saved or shared.
How to use it
Margin and markup both describe the same gross profit, just measured against two different amounts. Margin divides that profit by the selling price, so it shows what share of what the customer pays ends up as profit. Markup divides the same profit by the cost, so it shows how much has been added on top of what the item cost to buy or make. Because the price is larger than the cost whenever there is a profit, markup is always the bigger percentage of the two, and quoting one figure when a client or supplier meant the other is a common way for a job to end up underpriced.
- Choose what you want to work out. Pick “From cost and price” to see the margin and markup for numbers you already have, or “From a target margin” to work out the price needed to hit a margin you are aiming for.
- Enter the cost of the item: what it costs you to buy or make one unit.
- In “From cost and price” mode, enter the selling price. In “From a target margin” mode, enter the target margin as a percentage instead.
- Change the currency if you are not working in US dollars. This only changes how the figures are displayed; no exchange rate is applied and no amount is converted.
- Read the two figures at the top, margin and markup, then the breakdown underneath for the exact amounts behind them.
Worked example
Say a plant shop buys a ceramic pot for $18.00 and prices it at $24.00. Entering those two figures in “From cost and price” mode gives:
- Gross profit: 24.00 – 18.00 = 6.00
- Margin: 6.00 / 24.00 x 100 = 25%
- Markup: 6.00 / 18.00 x 100 = 33.33%
That is the same $6.00 of profit stated two ways: a quarter of the price, or a third on top of the cost. Now say the shop wants a 30% margin on that same $18.00 cost, instead of guessing at a price. Switching to “From a target margin”, entering 18.00 as the cost and 30 as the target, gives $25.71 as the price required. Adding 30% straight onto the cost, $18.00 x 1.30 = $23.40, looks similar but only works out to a 23.08% margin, not 30%, because it divides by the cost rather than the price. Reaching a target margin means dividing the cost by (1 minus the margin), not adding a percentage on top of it.
Limitations
Frequently asked questions
What is the difference between margin and markup?
They are the same gross profit expressed as two different percentages. Margin is profit divided by the selling price; markup is profit divided by the cost. Because the price is larger than the cost whenever there is a profit, markup is always the bigger of the two figures for the same sale: a 50% markup works out to a 33.33% margin, not 50%.
How do I work out the price I need to charge for a target margin?
Switch to “From a target margin”, enter the cost and the margin you want, and the calculator divides the cost by (1 minus the margin as a decimal). Adding the margin percentage straight onto the cost gives a markup of that amount rather than a margin of it, and undercharges.
Can markup ever be smaller than margin?
Not once there is a profit. Markup divides the profit by the smaller number, the cost, while margin divides it by the larger number, the price, so markup is always the higher percentage. The two are only equal, at zero, when there is no profit at all.
Does this include VAT, sales tax or other fees?
No. Enter costs and prices excluding tax, and treat the result as a gross figure before overheads and fees are taken out. To add or remove VAT first, use the VAT calculator.
Is anything I enter sent to Earnox Secure or saved?
No. The calculation runs in your browser. Nothing typed here is transmitted, stored or shared.
Related guides
For a longer walkthrough with more examples, read “Margin vs markup” on the blog. For what is left once payment or marketplace fees come out, try the fee and net payout calculator.
Need this built into your own spreadsheet?
If pricing runs through a spreadsheet or an invoice template rather than one item at a time, we can help set it up so your margin rules apply automatically.