How do you calculate markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. They are different numbers from the same sale: a 50% markup produces a 33.3% margin. Confusing the two is the most common cause of accidental underpricing.
Markup Calculator formula
Selling price = Cost x (1 + Markup% / 100) Margin% = (Selling price - Cost) / Selling price x 100
Worked example: A unit costing 100 with a 50% markup sells for 150. Profit is 50, which is a 50% markup on cost but a 33.33% margin on the price.
How this works in your browser
Selling price is cost multiplied by one plus the markup percentage; profit is price minus cost; margin is profit divided by price. Reporting markup and margin from the same inputs rather than one or the other is deliberate, because the two answer different questions and the gap between them widens as the numbers grow: a 100% markup is a 50% margin, and a 300% markup is a 75% margin. Everything is computed in your browser with nothing transmitted.
Who uses Markup Calculator
Setting retail prices
Apply a consistent markup across a product range and see the resulting margins.
Checking profitability
Confirm an existing price leaves enough margin once costs have moved.
Quoting trade work
Mark up materials consistently rather than guessing each time.
Understanding the two figures
See exactly how a given markup translates into margin.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A 50% markup on a cost of 100 gives a price of 150 and a margin of 33%, not 50%. Treating the two as interchangeable is one of the most common and most expensive pricing errors.
Which should I price on?
Markup is easier to apply consistently when pricing from cost, which is why retail and trade use it. Margin is what your accounts and your investors look at, because it shows how much of each pound of revenue you keep. Set prices with markup, judge the business on margin.
What markup is normal?
It varies enormously by sector: grocery runs on very thin markups and high volume, while clothing and jewellery traditionally use a keystone markup of 100%. Your own floor is set by your fixed costs, not by convention, so work back from what you need to cover.
Does this include tax?
No, the figures are exclusive of sales tax or VAT. Add that on top of the calculated selling price, since tax is collected on behalf of the authority rather than being part of your margin.
Are my costs sent anywhere?
No. The calculation runs entirely in your browser.