Margin and markup formulas
Example: an item that costs $60 and sells for $100 makes $40 of profit. That's a 40% margin ($40 ÷ $100) but a 66.67% markup ($40 ÷ $60).
Margin is not markup
Both describe the same profit, measured against different numbers. Margin divides by the selling price, so it can never reach 100%. Markup divides by the cost, so it can be any size. Mixing them up is one of the most common pricing mistakes: adding a 40% markup to a $60 cost gives $84, which is only a 28.6% margin.
| Margin | Same as a markup of |
|---|---|
| 20% | 25% |
| 25% | 33.33% |
| 33.33% | 50% |
| 40% | 66.67% |
| 50% | 100% |
| 60% | 150% |
This calculator works out gross margin on one item. Net margin also takes out overheads such as rent, wages and fees.
Next steps
Running a sale? The discount calculator shows the sale price, and the sales tax calculator adds tax at the register.
Frequently asked questions
How do I calculate profit margin?
Subtract the cost from the selling price, divide by the selling price and multiply by 100. Selling a $30 item for $50 is a 40% margin.
How do I price something for a 30% margin?
Divide the cost by 0.70. A $35 cost needs a $50 price for a 30% margin.
Is a 50% markup the same as a 50% margin?
No. A 50% markup on a $100 cost gives a $150 price, which is a 33.33% margin. A 50% margin needs a $200 price, a 100% markup.
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