The Business Calc

Markup vs. Margin Calculator

Markup is profit ÷ cost; margin is profit ÷ price. An item that costs $60 and sells for $100 has a 66.7% markup but only a 40% margin. Enter your own numbers below.

Updated · Standard cost-accounting formulas, shown in full below.

Try an example
    Margin — share of price you keep 40.0%

    The same profit is a 66.7% markup on cost. Both describe $40.00.

    $40.00 Profit $60.00 the COST 66.7% Markup
    $40.00 Profit $100.00 the PRICE 40.0% Margin

    Identical profit on top. Only the figure underneath changes — and because cost is the smaller of the two, markup always reports the bigger percentage for the very same deal.

    Quote this deal as 66.7% markup or 40.0% margin — identical money. Apply the wrong one and you'd price it at $84.00.

    Markup on cost 66.7%
    Profit per unit $40.00

    Markup vs. margin chart

    The same profit, measured two ways
    Markup divides profit by cost 66.7%
    divides by cost — $60.00
    Margin divides the same profit by price 40.0%
    divides by price — $100.00
    Identical bars, identical $40.00 of profit. Only the grey rule underneath changes — the shorter one (cost) gives the bigger percentage, which is why markup always flatters the same deal.

    Markup vs. margin explained

    • You keep 40.0% of every dollar charged. Quoted as markup, the same deal is 66.7%.
    • Markup always looks bigger than margin. Confusing them means underpricing — pricing this item at a 40.0% markup instead would cost you $16.00 a unit.
    • Margin is the number to plan profit with; markup is the number most suppliers quote. Check which one a quote means before you accept it.

    Markup and margin formulas

    Formula and worked example
    markup % = (price − cost) ÷ cost × 100 margin % = (price − cost) ÷ price × 100

    Same numerator — your profit per unit — but a different denominator. That is the entire reason the two percentages diverge, and why "add 30%" means two different prices depending on which one was meant.

    Worked example

    Cost
    $60
    Price
    $100
    Profit
    $40
    Markup vs. margin
    66.7% · 40%
    If you'd used 40% as markup
    $84 price — $16 lost

    Markup vs. margin FAQ

    Aren't markup and margin the same thing?

    No, even though they're often confused. Markup is profit expressed as a percentage of cost. Margin is the same dollar profit expressed as a percentage of selling price. Because cost and price are different numbers, the two percentages are always different unless profit is zero.

    Why does a 50% markup not equal a 50% margin?

    A 50% markup on a $100 cost gives a $150 price, meaning $50 profit on $100 of cost. That same $50 profit is only 33.3% of the $150 selling price — a 33.3% margin. Markup is always the larger number whenever there's a profit.

    Which one should I use to set prices?

    Margin is usually more useful for profitability planning, since it tells you what share of each sales dollar you keep. Markup is common in retail and wholesale pricing conventions. Many pricing mistakes come from applying one percentage while assuming it means the other.

    What if the selling price is lower than the cost?

    Both markup and margin come out negative, which correctly signals you're selling at a loss on that item.

    Can margin ever reach 100%?

    Only if your cost is zero, which is why the selling price calculator rejects a 100% margin target. Markup, by contrast, has no upper limit — a $1 cost sold for $100 is a 9,900% markup but a 99% margin.

    Related calculators

    Next
    Next step Selling Price Calculator Work the other direction: pick the margin you want, get the price to charge.