Markup vs Margin Calculator

What you know

Cost

Selling price

Result

Selling price$1,500.00
Markup, %50%
Margin, %33.33%
Profit per unit$500.00
Multiplier on cost1.5
Cost$1,000.00

Markup is on cost, margin is on price

Converts markup to margin and back, and prices from either — starting from cost or from a target margin.

Markup and margin are measured against different bases, and confusing them is expensive. Markup is profit over cost; margin is the same profit over selling price. A hundred percent markup is a fifty percent margin.

The error shows up when working backwards. To reach a thirty percent margin, divide cost by 0.7 — do not multiply by 1.3. Multiplying gives a 23 percent margin, and seven points of profit disappear unnoticed.

What this calculator shows

Markup and margin together, whichever way you entered the numbers
Selling price and profit per unit
The multiplier on cost, handy for mental arithmetic

What to keep in mind

Margin here is gross: price less cost of goods, before rent, salaries and tax.
Margin cannot reach a hundred percent while cost is above zero, and the calculator says so.

FAQs

What margin does a hundred percent markup give?

Fifty. An item costing 1,000 sells at 2,000: profit is 1,000, which is a hundred percent of cost and fifty percent of price.

How do I price for a target margin?

Divide cost by one minus the margin as a fraction. For thirty percent that is dividing by 0.7. Multiplying by 1.3 is the common mistake and yields only 23 percent.

Which should reports use?

Margin: it is comparable across products and states the share of revenue kept as profit. Markup suits purchasing, where the starting point is cost.

Can margin exceed a hundred percent?

No — a hundred is the ceiling, reached only at zero cost. Markup has no ceiling and can easily run to a thousand percent.

Worked example

An item costing a thousand

Input: Cost 1,000, price 1,500

Output: Markup 50 percent, margin 33.33 percent, multiplier 1.5

Note: To reach a margin of exactly fifty percent the price would have to be 2,000, a markup of a hundred percent. The gap between the two widens as profitability rises.

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Markup vs Margin Calculator

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