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Profit Margin and Markup Calculator
Find your margin, markup and profit from cost and price, or work out the selling price that hits a target margin.
Formulas
- Gross profit = Price − Cost
- Gross margin = Profit ÷ Price × 100
- Markup = Profit ÷ Cost × 100
- Price for a target margin = Cost ÷ (1 − Margin)
- Price from markup = Cost × (1 + Markup)
Example
A product costs $60 and sells for $100. Profit is $40, the margin is 40 ÷ 100 = 40%, and the markup is 40 ÷ 60 = 66.7%.
Margin and markup conversion table
| Margin | Markup needed |
|---|---|
| 20% | 25% |
| 25% | 33.3% |
| 33.3% | 50% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
Converting: Markup = Margin ÷ (1 − Margin), and Margin = Markup ÷ (1 + Markup). Mixing the two up is one of the most common pricing mistakes in small businesses.
Frequently asked questions
What is the difference between margin and markup?
Both compare profit with a base. Margin is profit as a share of the selling price; markup is profit as a share of cost. An item costing $60 and selling for $100 has a 40% margin but a 66.7% markup.
How do I price for a 40% margin?
Divide the cost by (1 − margin). For a $60 cost and 40% margin: 60 ÷ 0.6 = $100. Adding 40% to the cost ($84) gives only a 28.6% margin.
What is a good profit margin?
It varies by industry. Grocery stores often run 25% to 30% gross margins, clothing retail 45% to 60%, and software 70% to 90%. Net margin, after all expenses, is much lower.