General information tools only — not tax or financial advice. Rates and rules vary by country and change over time; confirm important figures with a qualified accountant.
How to use the margin & markup calculator
Margin and markup are not the same number
They describe the same profit two different ways. Margin is profit as a percentage of the selling price — it is the number in your accounts. Markup is profit as a percentage of the cost — it is the number used when pricing. Confusing them is one of the most expensive mistakes in small-business pricing: a 20% markup is only a 16.7% margin.
Working backwards from margin
If your accounts target a gross margin — say 30% — use the second tab. Dividing cost by (1 − 0.30) gives the price that actually delivers a 30% margin; simply adding 30% to cost would not.
Example
Cost 80, price 100: profit is 20. Margin = 20 ÷ 100 = 20%. Markup = 20 ÷ 80 = 25%. And to earn a 20% margin on an 80 cost you must charge exactly 100 — try it in the second tab.
Frequently asked questions
Is a 50% markup the same as a 50% margin?
No. Cost 100 marked up 50% sells at 150, and the profit of 50 is only 33.3% of that price. A true 50% margin on a cost of 100 needs a price of 200.
Which should my business track?
Track margin in your accounts (it matches your profit-and-loss statement) and use markup carefully when setting prices — ideally by converting with this tool.
Can margin be over 100%?
No. Margin is a share of the price, so it is always below 100%. Markup can exceed 100% when profit is larger than cost.
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