--- title: "Margin Calculator | Method Calculator" description: "Calculate profit margin and markup from cost and selling price, or find the price you need for a target margin or markup. Includes a margin vs. markup table." canonical_url: "https://methodcalculator.com/margin-calculator" meta: "og:description": "Calculate profit margin and markup from cost and selling price, or find the price you need for a target margin or markup. Includes a margin vs. markup table." "og:image": "https://methodcalculator.com/_og/s/o_5690ec75c9248186.png" "og:image:height": "600" "og:image:type": image/png "og:image:width": "1200" "og:title": "Margin Calculator – Free Online Tool" "twitter:image": "https://methodcalculator.com/_og/s/o_5690ec75c9248186.png" --- > Index of every page on this site: [llms.txt](https://methodcalculator.com/llms.txt) # **Margin Calculator** Enter what an item costs you and what you sell it for to see the profit, the margin and the markup. Or start from the cost and a target margin or markup to find the selling price you need. ## **Result** Profit margin **50%**
Selling price
$100.00
Cost
$50.00
Profit per unit
**$50.00**
Markup
100%
**Margin to markup conversion** | **Margin** | **Equivalent markup** | **Price on your cost** | | --- | --- | --- | | 10% | 11.11% | $55.56 | | 15% | 17.65% | $58.82 | | 20% | 25% | $62.50 | | 25% | 33.33% | $66.67 | | 30% | 42.86% | $71.43 | | 40% | 66.67% | $83.33 | | 50% | 100% | $100.00 | | 60% | 150% | $125.00 | | 70% | 233.33% | $166.67 | | 80% | 400% | $250.00 | ## What profit margin is and why it matters Profit margin is the share of each sale that is profit. If you sell something for $100 and it cost you $50, half the money you take in is profit, so the margin is 50%. Margin is how retailers, manufacturers and investors judge whether a product or a whole business is priced sensibly, because it is comparable across items of very different prices. A $2 item and a $2,000 item can both run a 30% margin. ## Margin and markup formulas **Profit = selling price − cost** **Margin = profit ÷ selling price × 100** **Markup = profit ÷ cost × 100** **Example:** an item costs $50 and sells for $100. Profit is 100 − 50 = **$50**. Margin is 50 ÷ 100 = **50%**. Markup is 50 ÷ 50 = **100%**. Same profit, two different percentages, because each one is measured against a different base. To go the other way and set a price from the cost: **Price for a target margin = cost ÷ (1 − margin)**, so a 40% margin on a $50 cost needs 50 ÷ 0.6 = $83.33. **Price for a target markup = cost × (1 + markup)**, so a 50% markup on a $50 cost gives 50 × 1.5 = $75. ## Margin vs. markup: why they get confused Both numbers describe the same dollar profit, which is why people treat them as interchangeable. The mistake usually runs one way: a business wants a 40% margin, multiplies cost by 1.4, and ends up with a 40% markup, which is only a 28.6% margin. Over thousands of sales that is a large slice of profit given away. The conversions are: **Markup = margin ÷ (1 − margin)** and **Margin = markup ÷ (1 + markup)** | Markup | Margin | Price on $50 cost | | --- | --- | --- | | 20% | 16.67% | $60.00 | | 25% | 20% | $62.50 | | 50% | 33.33% | $75.00 | | 100% | 50% | $100.00 | | 150% | 60% | $125.00 | Markup is always the bigger of the two, and it can exceed 100% while margin never can. The full conversion table appears under the calculator above. ## Gross margin vs. net margin This calculator computes **gross margin** on a single item: price minus the direct cost of the goods. A business's **net margin** also subtracts rent, wages, marketing, interest and taxes, and is typically a small fraction of the gross figure. A shop with a 50% gross margin might keep 5–10% net. Keep both in view: gross margin tells you whether a product is worth selling, net margin whether the business survives. ## How to use this calculator 1. Choose "Cost and price" if you already have both numbers and want the margin and markup. 2. Choose "Cost and target margin" or "Cost and markup" to work out the selling price from a pricing rule. 3. Enter the cost of the item, including freight and any other per-unit costs you want to recover. 4. Read the profit per unit, margin and markup. The table shows what every common margin means in markup and in price for your cost. ## Pricing tips - **Decide which number your rule is in.** If a supplier suggests "keystone" pricing (doubling the cost), that is a 100% markup and a 50% margin. - **Model discounts before offering them.** At a 50% margin, a 20% price cut removes 40% of the profit on each sale; see what a promotion does with the [discount calculator](https://methodcalculator.com/discount-calculator). - **Exclude sales tax from the price.** Tax passes through to the government and is not revenue; the [sales tax calculator](https://methodcalculator.com/sales-tax-calculator) separates it out. - **Count every cost.** Payment processing, packaging, returns and shipping subsidies all come out of the gross margin. - **Compare with the return on the money tied up.** A thin margin on fast-moving stock can beat a fat margin on items that sit for months; the [ROI calculator](https://methodcalculator.com/roi-calculator) helps compare them over time. ## **Frequently asked questions ** ### **What is the difference between margin and markup?** Both describe the same profit, but margin divides it by the selling price while markup divides it by the cost. A product bought for $50 and sold for $100 has a 50% margin and a 100% markup. Markup is always the larger number, and the gap widens as prices rise relative to cost. ### **What is a good profit margin?** It depends on the industry. Grocery stores often run gross margins of 20–30%, restaurants around 60–70% on food (before labour and rent), and software businesses above 80%. Compare your figure with businesses selling similar things, and remember that the net margin left after all expenses is usually far smaller. ### **How do I price a product for a 40% margin?** Divide the cost by (1 − 0.40). An item that costs $50 must sell for 50 ÷ 0.6 = $83.33. Multiplying the cost by 1.4 would give $70, which is only a 28.6% margin; that shortcut gives you a 40% markup, not a 40% margin. ### **Can a margin be more than 100%?** No. Margin is profit divided by price, and profit can never exceed the price unless the cost is negative. Markup, on the other hand, has no upper limit: a $10 item sold for $100 carries a 900% markup but a 90% margin. ### **Does margin include taxes and shipping?** Use the selling price excluding sales tax, since tax is collected for the government rather than earned. Whether shipping, packaging and payment fees belong in the cost depends on how you track them; including every cost you incur per sale gives a more honest contribution margin. ## **Related calculators ** - [**Discount Calculator**](https://methodcalculator.com/discount-calculator) - [**ROI Calculator**](https://methodcalculator.com/roi-calculator) - [**Percentage Calculator**](https://methodcalculator.com/percentage-calculator) - [**Sales Tax Calculator**](https://methodcalculator.com/sales-tax-calculator) ```json {"@context":"https://schema.org","@graph":[{"@id":"https://methodcalculator.com/#website","@type":"WebSite","description":"Free online calculators for finance, health and fitness, math and everyday life. 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