Markup and Margin Calculator
A margin calculator divides profit by the selling price. An item that costs $60 and sells for $80 earns $20 profit, so the margin is $20 ÷ $80 = 25%. Markup divides the same $20 by the cost instead: $20 ÷ $60 ≈ 33.33%. To price for a target margin, use price = cost ÷ (1 − margin).
Business profit margin, not trading margin
Show steps
- Profit is what is left of the price after the cost: profit = price − cost = $80.00 − $60.00 = $20.00.
- Margin is profit as a share of the selling price: $20.00 ÷ $80.00 = 0.25, and 0.25 × 100 = 25%.
- Markup is the same profit as a share of the cost: $20.00 ÷ $60.00 ≈ 0.333333, and 0.333333 × 100 ≈ 33.33%.
- Check: $60.00 + $20.00 = $80.00 ✓. Margin and markup describe the same profit; they only divide by different amounts.
| Margin | Price | Profit | Markup |
|---|---|---|---|
| 10% | $66.67 | $6.67 | 11.11% |
| 20% | $75.00 | $15.00 | 25% |
| 25% (yours) | $80.00 | $20.00 | 33.33% |
| 30% | $85.71 | $25.71 | 42.86% |
| 40% | $100.00 | $40.00 | 66.67% |
| 50% | $120.00 | $60.00 | 100% |
| 60% | $150.00 | $90.00 | 150% |
How to use the margin and markup calculator
- Pick a tab. Any two values solves cost, selling price, profit, margin and markup from any two of them. Markup ↔ margin converts one percent to the other. Price for a margin finds the price that keeps a target margin. Several items works out the blended margin of a product mix.
- Type your numbers. Money goes in dollars and cents; margin and markup go in as percents, for example 25 for 25%.
- Read the answer, then the Margin vs. markup with your numbers box, which shows both percents for the same profit.
- Open Show steps for the full working, and use the table to compare other margins at your cost.
Margin and markup formulas
Let C be the cost of one item, P the selling price (revenue) and profit = P − C. Write percents as decimals.
- Margin = (P − C) ÷ P. Profit as a share of the price.
- Markup = (P − C) ÷ C. Profit as a share of the cost.
- Price from a margin: P = C ÷ (1 − margin).
- Price from a markup: P = C × (1 + markup).
- Markup to margin: margin = markup ÷ (1 + markup).
- Margin to markup: markup = margin ÷ (1 − margin).
Every one of these is a percent of a number, so the percentage calculator is a good place to practice the basic step.
Margin vs. markup: why the two percents differ
Margin and markup describe the same profit. They only divide it by different amounts. Margin divides by the price, which is what the customer pays. Markup divides by the cost, which is what you paid. When there is a profit, the cost is smaller than the price, so the markup is always the larger percent.
The mix-up costs real money. Suppose you want a 40% margin on an item that costs $60 and you add 40% to the cost: $60 × 1.4 = $84. The profit is $24, and $24 ÷ $84 ≈ 28.57%, well short of 40%. The right price is $60 ÷ (1 − 0.4) = $60 ÷ 0.6 = $100, which leaves $40 profit, and $40 ÷ $100 = 40%.
A margin can never reach 100%, because profit would have to be the whole price and the cost would be $0. A markup has no such limit: doubling the cost is a 100% markup, which is a 50% margin.
Worked examples
Example 1: margin and markup from cost and price
A shop buys a lamp for $45 and sells it for $72. Profit = $72 − $45 = $27. Margin = $27 ÷ $72 = 0.375 = 37.5%. Markup = $27 ÷ $45 = 0.6 = 60%. Check with the conversion formula: 0.6 ÷ 1.6 = 0.375.
Example 2: price for a target margin
An item costs $60 and you want a 40% margin. Price = $60 ÷ (1 − 0.40) = $60 ÷ 0.6 = $100. The markup that gets you there is $40 ÷ $60 ≈ 66.67%, not 40%.
Example 3: blended margin on several products
A stall sells 120 notebooks (cost $2.50, price $4.00), 40 pen sets (cost $6.00, price $9.00) and 15 backpacks (cost $18.00, price $30.00). Sales are $480 + $360 + $450 = $1,290 and costs are $300 + $240 + $270 = $810, so profit is $480 and the blended margin is $480 ÷ $1,290 ≈ 37.21%. The item margins are 37.5%, 33.33% and 40%, and their plain average is about 36.94%. The plain average is wrong because it ignores how much of each item sold; the blended margin is a sales-weighted average, the same idea as the weighted average calculator.
Markup and margin conversion table
| Margin | Markup | Price = cost × |
|---|---|---|
| 10% | 11.11% | 1.1111 |
| 20% | 25% | 1.25 |
| 25% | 33.33% | 1.3333 |
| 30% | 42.86% | 1.4286 |
| 40% | 66.67% | 1.6667 |
| 50% | 100% | 2 |
| 60% | 150% | 2.5 |
| 75% | 300% | 4 |
Read it either way: a 25% margin needs a 33.33% markup, and a 100% markup gives a 50% margin. The multipliers in the last column are rounded to 4 decimal places.
Gross margin, operating margin and net margin
The word “margin” depends on which costs you subtract. The SEC’s Beginners’ Guide to Financial Statements calls revenue minus the cost of sales “gross profit” or sometimes “gross margin.” Subtract operating expenses as well and you reach operating income, and the guide defines operating margin as income from operations divided by net revenues. Net profit, also called net income, is what remains after every expense.
- Gross margin: enter only the cost of the goods themselves.
- A per-item net figure: add shipping, packaging and fees to the cost before you enter it.
Discounts and sales tax
A discount comes straight out of your profit. With a $60 cost and an $80 price, a 10% discount brings the price to $72, the profit to $12 and the margin to $12 ÷ $72 ≈ 16.67%. A 10% price cut took 40% of the profit. The percent change calculator shows changes like this one.
Sales tax is collected for the state, so it is not revenue. Work out margin on the price before tax; the sales tax calculator can take the tax out of a total first.
Not trading margin
This page is about profit margin on goods and services. In investing, a margin account is a brokerage account in which the broker lends you cash, using your account as collateral. That kind of margin, along with portfolio margin requirements, is a different subject and this calculator does not cover it. Investor.gov explains margin accounts (see Sources).
Common margin mistakes
- Adding the margin percent to the cost. Divide by (1 − margin) instead.
- Calling a markup a margin. A 50% markup is only a 33.33% margin.
- Averaging item margins. Divide total profit by total sales.
- Including sales tax in the price. Use the price before tax.
- Forgetting costs. Shipping and fees lower the real margin.
Results are estimates for checking arithmetic and planning prices. They are not financial or accounting advice.
Sources
Checked November 2026.
- U.S. Securities and Exchange Commission: Beginners’ Guide to Financial Statements
- Investor.gov (SEC): Investor Bulletin, Understanding Margin Accounts
Markup and margin practice quiz: 10 questions
Test yourself with 10 multiple-choice questions. Choose an answer and press Submit to see if you are right and why. Your score appears at the end.
Margin is profit divided by price: ($50 − $30) ÷ $50 = $20 ÷ $50 = 40%. 66.67% is the markup, because it divides by the cost.
Price = cost ÷ (1 − margin) = $48 ÷ 0.8 = $60. Adding 20% to the cost gives $57.60, which is only a 16.67% margin.
Cost = price × (1 − margin) = $120 × 0.65 = $78. Dividing by 1.35 treats 35% as a markup.
Profit is $250 + $300 = $550 on $2,000 of sales: $550 ÷ $2,000 = 27.5%. The plain average, 35%, ignores that B sells three times as much.
Profit is $32 − $40 = −$8, a loss. Margin = −$8 ÷ $32 = −25%. The markup is −$8 ÷ $40 = −20%.
The new price is $72, so profit is $12 and the margin is $12 ÷ $72 ≈ 16.67%.
Profit can never exceed the price, so margin stays below 100%. Markup divides by the cost and has no upper limit; with a profit it is the larger of the two.
Quiz complete
Frequently asked questions
What is the difference between margin and markup?
Both use the same profit. Margin divides it by the selling price and markup divides it by the cost. An item bought for $60 and sold for $80 has a 25% margin and a 33.33% markup.
How do I calculate a 30% profit margin?
Divide the cost by 1 − 0.30 = 0.7. For a $70 cost, the price is $70 ÷ 0.7 = $100, which leaves $30 profit, or 30% of the price.
What markup gives a 50% margin?
A 100% markup. Doubling the cost makes the profit equal to the cost, which is half of the price: 0.5 ÷ (1 − 0.5) = 1, or 100%.
Can a profit margin be more than 100%?
No. Profit can never exceed the price, so a margin stays below 100% (it can be negative for a loss). A markup can be any size: a 300% markup is a 75% margin.
How do I calculate margin in Excel?
With the cost in A2 and the price in B2, enter =(B2-A2)/B2 and format the cell as a percentage. For markup, use =(B2-A2)/A2.
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