How to use the margin and markup calculator
- Choose the mode: from price, from margin or from markup.
- Enter the cost per unit.
- Enter the selling price, the target margin or the target markup, depending on the mode.
- Read the price, margin, markup and profit per unit.
Formulas
- Profit = price − cost.
- Margin = (price − cost) ÷ price.
- Markup = (price − cost) ÷ cost.
- Price from margin = cost ÷ (1 − margin).
- Price from markup = cost × (1 + markup).
- Converting: markup = margin ÷ (1 − margin); margin = markup ÷ (1 + markup).
Worked examples
- From price: cost $60, price $100 → profit $40, margin 40%, markup 66.67%.
- From margin: cost $60, target margin 40% → price $100.
- From markup: cost $60, markup 50% → price $90, margin 33.33%.
Quick conversion table
| Markup | Margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
Why the difference matters
Confusing margin and markup is one of the most common pricing mistakes. If you want a 50% margin but apply a 50% markup, you end up with a 33% margin, and much less profit than planned. Decide which measure your business uses, and label it clearly in price lists and reports.
Tips
- Include all unit costs: purchase price, shipping, packaging and payment fees.
- Know your target margin for each product category.
- Check competitor prices; the calculated price must also be one customers will pay.
- Remember fixed costs; a positive margin per unit doesn’t guarantee overall profit. The break-even calculator helps there.
- Exclude VAT or GST from both cost and price if you can reclaim it.
Discounts and margin
A discount comes straight out of your profit. On a $100 item that costs $60, a 20% discount cuts the price to $80 and the profit from $40 to $20: half your margin is gone. Use the calculator to check the margin left after any planned promotion.
Setting prices with margins
Many retailers set a target margin by category and calculate prices from cost. Start with the margin you need to cover overheads and profit, use “from margin” mode to get the price, then check it against what customers will pay and what competitors charge. If the market price is lower than your calculated price, look for ways to reduce cost or add value, rather than simply accepting a margin that may not cover your overheads.
Limitations
The calculator works per unit and doesn’t include overheads, taxes or volume discounts. Use it alongside the break-even calculator, which shows how many units at a given margin you need to sell to cover your fixed costs.