Finance calculator
Margin vs Markup Calculator
Margin and markup describe the same profit but as a percentage of two different things: markup is profit over cost, while margin is profit over the selling price. This calculator shows both from your cost and price so you can price products correctly and stop confusing the two.
How to use this calculator
- Enter the cost of the item (what you pay).
- Enter the selling price (what the customer pays).
- Read the gross margin, the markup, and the profit per unit.
Formula
- Profit = selling price - cost
- Markup = profit / cost x 100
- Gross margin = profit / selling price x 100
Example calculation
An item that costs $70 and sells for $100 has a $30 profit: a 42.9% markup but only a 30% gross margin. Markup is always the larger number.
How to interpret the results
- Markup is always larger than margin for the same profit, because cost is smaller than price.
- Price from cost using markup; judge profitability using margin. Mixing them up leads to underpricing.
- To hit a target margin, the required markup rises quickly — a 50% margin needs a 100% markup.
Frequently asked questions
What is the difference between margin and markup?
Both measure the same profit. Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. Because price is larger than cost, the markup percentage is always higher than the margin percentage.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). For example, a 42.9% markup equals a 30% margin. This calculator does the conversion automatically from your cost and price.
Which should I use to set prices?
Use markup to set a price from a known cost (price = cost x (1 + markup)). Use margin to compare profitability across products, since it's measured against revenue.
Planning disclaimer
MoneyHackWise calculators are for general informational and planning purposes only and do not provide financial, investment, tax, legal, accounting, lending, or business advice. Results are estimates based on the inputs and assumptions shown.