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Margin Calculator
Work out profit margin, markup and selling price without confusing the two.
Margin and markup are the two most frequently mixed-up numbers in small business, and the confusion costs real money. They are calculated from the same two figures and they are not the same thing.
Margin and markup, settled once
Markup is profit as a percentage of what the item cost you. Margin is profit as a percentage of what you sold it for. Same profit, different denominator, very different number.
Buy something for 100 and sell it for 150. Your markup is 50%, because the profit is half the cost. Your margin is 33.3%, because the profit is a third of the selling price. If you price a product expecting a 50% margin but apply a 50% markup, you will end up a third short of where you thought you were.
Using the calculator
- Enter your cost price — what the item costs you, landed.
- Enter either your selling price, your desired margin, or your desired markup.
- Read the remaining figures, which are filled in for you.
- Adjust the selling price to see how margin responds.
- Repeat for each product line rather than assuming one blended figure.
Markup to margin at a glance
| Markup | Margin | Sell a 100 cost item at |
|---|---|---|
| 20% | 16.7% | 120 |
| 25% | 20.0% | 125 |
| 50% | 33.3% | 150 |
| 66.7% | 40.0% | 166.70 |
| 100% | 50.0% | 200 |
| 150% | 60.0% | 250 |
Costs people forget to include
- Payment processing fees, which quietly take 2–3% of every sale.
- Shipping and packaging, if you are absorbing them rather than charging separately.
- Returns and breakages, which are a real cost of doing business.
- Import duty and customs handling on anything sourced abroad.
- Your own time, which is not free even when it is unpaid.
Margin and markup questions
What is the difference between margin and markup?
Markup measures profit against cost; margin measures profit against selling price. A 50% markup is only a 33.3% margin. Mixing them up is the single most common pricing error in retail.
How do I calculate profit margin?
Subtract cost from selling price to get the profit, divide by the selling price, and multiply by 100. Sell for 150 having paid 100 and the margin is (50 ÷ 150) × 100 = 33.3%.
What margin should I aim for?
It varies enormously by industry. Grocery retail runs on single-digit margins and survives on volume; software can exceed 80%. Compare yourself against your own sector rather than a general rule.
What is gross margin versus net margin?
Gross margin counts only the direct cost of the goods. Net margin subtracts everything else too — rent, salaries, marketing, tax. A healthy gross margin can still produce a net loss.
Can margin ever exceed 100%?
No. Margin is a share of the selling price, so it approaches 100% but never reaches it. Markup has no such ceiling and can be any percentage at all.
