Margin calculator

Profit margin and markup calculator

Margin and markup are not the same, and mixing them up is one of the most common pricing mistakes. Enter any two values (cost, price, margin or markup) and see the others, with a quick table that converts between them.

✓ Margin %
✓ Markup %
✓ Price from cost
✓ Cost from price

Your numbers

I know

Cost

Selling price

Markup

%

Margin

%

Currency

Result

Selling price

–

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Calculate on prices excluding VAT or sales tax.

How to use the margin and markup calculator

Choose what you know. Pick “cost and markup”, “cost and margin”, “cost and price” or “price and margin”.
Enter the two values. For example a cost of 80 and a margin of 20%. Use your own currency.
Read the other values. The result gives the selling price, profit, margin and markup together.
Check against the table. The table shows what markup equals each margin, so you can compare quotes in either language.
Put the price on a quote or invoice. Use the price as a unit price in a quote or an invoice.

Margin versus markup

Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. Because price is bigger than cost, margin is always smaller than markup.

Profit = price − cost
Markup % = profit ÷ cost × 100
Margin % = profit ÷ price × 100
Price from cost and markup = cost × (1 + markup ÷ 100)
Price from cost and margin = cost ÷ (1 − margin ÷ 100)

If you buy something for 80 and sell it for 100, profit is 20. Markup is 20 ÷ 80 = 25%. Margin is 20 ÷ 100 = 20%. A 25% markup gives a 20% margin, not 25%.

Margin to markup conversion table

Margin	Markup	Price for a cost of 100
10%	11.11%	111.11
20%	25.00%	125.00
25%	33.33%	133.33
30%	42.86%	142.86
40%	66.67%	166.67
50%	100.00%	200.00
60%	150.00%	250.00
75%	300.00%	400.00

The conversion is markup = margin ÷ (1 − margin), and margin = markup ÷ (1 + markup), using decimals.

Worked examples

Known	Calculation	Result
Cost 60, markup 50%	60 × 1.5	Price 90, profit 30, margin 33.33%
Cost 60, margin 40%	60 ÷ 0.6	Price 100, profit 40, markup 66.67%
Cost 250, price 400	(400 − 250) ÷ 400	Profit 150, margin 37.5%, markup 60%
Price 1,000, margin 35%	1,000 × 0.65	Cost 650, profit 350, markup 53.85%

Using margins when you sell services

If you sell your time, “cost” is the cost of delivering the work: your pay (or an owner’s salary equivalent), subcontractors, software and a share of overheads. Margin is what is left to grow the business. Agencies and consultancies often track the margin on each project and the margin of the whole business, because overheads such as rent and admin must come from the overall margin.

When you pass costs through to a client, for example materials or subcontractors, decide whether you add a handling markup, and show it clearly on the invoice. Many clients accept a modest markup if it is stated in the contract. Hidden or undisclosed markups damage trust and may breach the contract.

Sales tax and VAT

Margin and markup should be calculated on prices excluding sales tax, VAT or GST, since that tax belongs to the tax authority. Use the VAT calculator to take it out of a gross price first.

Common pricing mistakes

Using markup when you meant margin. A 50% markup is a 33% margin, not 50%.
Ignoring overheads. A margin that looks healthy on a project can disappear after rent, tools and admin.
Calculating on VAT-inclusive prices. Take tax out first.
Not allowing for discounts and refunds. A 10% discount on a 20% margin cuts profit in half.
Setting prices only by competitors. They may have different costs.

Glossary

Margin: Profit as a percentage of the selling price.
Markup: Profit as a percentage of cost.
Gross profit: Revenue minus the direct cost of what you sold.
COGS: Cost of goods sold: the direct costs of producing what you sold.
Overheads: Running costs of the business not tied to a single sale.

Frequently asked questions

What is the difference between margin and markup?

Markup is profit divided by cost. Margin is profit divided by the selling price. A product bought for 80 and sold for 100 has a 25% markup and a 20% margin.

How do I calculate profit margin?

Subtract cost from price to get profit, divide by price, and multiply by 100. For a cost of 60 and a price of 100, margin is 40%.

How do I calculate selling price from cost and margin?

Divide the cost by 1 minus the margin as a decimal. For a cost of 60 and a margin of 40%, price = 60 ÷ 0.6 = 100.

How do I calculate selling price from cost and markup?

Multiply the cost by 1 plus the markup as a decimal. For a cost of 60 and a markup of 50%, price = 60 × 1.5 = 90.

What is a good profit margin?

It depends on the industry. Retail margins are often thin, software and consulting can be much higher. Compare yourself with businesses like yours and check if your margin covers overheads.

Can a margin be more than 100%?

No. Margin is a share of the price, so it cannot exceed 100%. Markup can be above 100%.

Should margin include sales tax or VAT?

No. Use prices excluding tax, since you pass that tax on to the authority.

What is gross margin versus net margin?

Gross margin counts only direct costs of what you sell. Net margin also subtracts overheads, interest and tax. This calculator works with whatever cost figure you enter.

How do I show a markup on an invoice?

List the cost-plus item as a line with its price, or show the markup as a separate line if your contract allows. Be clear and agree it in advance.

Is my data saved?

The numbers stay in your browser only and are not sent anywhere. Use reset to clear them.