Markup calculator: price, markup and margin
Enter a cost and a markup to get the selling price, or a cost and a price to get the markup and gross margin. Price to a target margin, or convert between markup and margin. Every mode shows both percentages side by side, so you never confuse the two.
- Cost
- $40.00
- Selling price
- $60.00
- Profit
- $20.00
Results are only as complete as the cost you enter. Include every direct cost of the sale (for labor, employer taxes and burden) to see a true gross margin.
How to calculate markup
Markup is how much you add on top of cost, expressed as a percentage of that cost. Work out the profit first, then divide it by the cost:
Example: an item costs $40.00 and sells for $50.00. Profit is $10.00, and $10.00 ÷ $40.00 = 25% markup. Going the other way, a $20.00 cost with a 50% markup sells for $20.00 × 1.5 = $30.00.
The same formulas work on totals. Put total cost of goods sold in the cost box and total revenue in the price box (the “Cost + price” mode) to get the markup and gross margin for a month, a product line or a whole business.
Markup vs margin
Markup and margin describe the same profit from two directions. Markup compares profit with what you paid; margin compares it with what you charged.
Because the price is bigger than the cost whenever you make money, the margin percentage is always the smaller of the two. The table converts common markups, with the price each one gives on a $100 cost.
| Markup | Margin | Price on a $100 cost |
|---|---|---|
| 10% | 9.1% | $110.00 |
| 20% | 16.7% | $120.00 |
| 25% | 20.0% | $125.00 |
| 30% | 23.1% | $130.00 |
| 40% | 28.6% | $140.00 |
| 50% | 33.3% | $150.00 |
| 60% | 37.5% | $160.00 |
| 75% | 42.9% | $175.00 |
| 100% | 50.0% | $200.00 |
And the reverse: the markup you need to reach a target margin.
| Target margin | Markup needed |
|---|---|
| 10% | 11.1% |
| 15% | 17.6% |
| 20% | 25.0% |
| 25% | 33.3% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100.0% |
| 60% | 150.0% |
Gross margin explained
Gross margin is the share of revenue left after the direct cost of what you sold. It is the “margin” this calculator reports.
- Gross margin
- Revenue minus direct costs only: the goods, materials or labor that went into the sale.
- Operating margin
- Gross profit minus operating expenses such as salaries, rent, marketing and software, divided by revenue.
- Net profit margin
- What is left after every cost, including interest and taxes, divided by revenue.
When people search for a profit margin calculator they usually want gross margin on a sale. If you want net margin, enter all costs for the period (direct costs plus overhead, interest and taxes) as the cost and total revenue as the price in “Cost + price” mode.
Staffing example: pay rate to bill rate
Staffing agencies use the same math with an hourly pay rate as the cost and the bill rate as the price. Take an example clinician paid $40.00/hr with a 50% markup on pay:
That 33.3% looks like the margin, but the agency also pays employer burden on every wage dollar: FICA, unemployment taxes, workers' compensation and any benefits. With an example burden of 20% of pay ($8.00/hr), loaded cost is $48.00/hr, gross profit is $12.00/hr and the real gross margin is 20.0%.
To price a placement with burden, travel stipends and program fees built in, use the staffing bill rate calculator. For why markup on pay and margin on bill rate diverge, read markup vs margin in staffing.
Common markup and margin mistakes
- Using a markup when you meant a margin. Adding 30% to cost gives a 23.08% margin, not 30%. To reach a 30% margin on a $70.00 cost you need $100.00, not $91.00.
- Leaving costs out. Shipping, payment fees, packaging, or for labor the employer taxes and benefits, all belong in cost. A markup on an incomplete cost overstates the margin.
- Forgetting that discounts come off the price. A 10% discount reduces the price, not the cost, so it takes a bigger bite out of margin than the headline suggests. Re-run the “Cost + price” mode with the discounted price.
- Averaging percentages. The blended margin across products is total gross profit ÷ total revenue, not the average of each product's margin. Big sellers count for more.
- Thinking a 100% margin is possible. Doubling your cost is a 100% markup but only a 50% margin. Margin can only reach 100% if the cost is zero.
Frequently asked questions
How do you calculate markup?
Subtract cost from selling price to get profit, then divide profit by cost and multiply by 100. Markup % = (price − cost) ÷ cost × 100. An item that costs $40.00 and sells for $50.00 has a $10.00 profit and a 25% markup. To go the other way, price = cost × (1 + markup).
What is a 50% markup?
A 50% markup means the selling price is 1.5 times cost: profit equals half the cost. A $20.00 cost marked up 50% sells for $30.00, a $10.00 profit. That is a 33.33% margin, not a 50% margin, because margin divides the same profit by the price instead of the cost.
What is the difference between markup and margin?
Both describe the same profit. Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. Because price is always larger than cost when you make a profit, the margin percentage is always smaller than the markup percentage. Markup can exceed 100%; margin cannot reach 100% unless the cost is zero.
How do you convert margin to markup?
Markup = margin ÷ (1 − margin), using decimals. A 20% margin is 0.20 ÷ 0.80 = 25% markup. To convert markup to margin, margin = markup ÷ (1 + markup): a 25% markup is 0.25 ÷ 1.25 = 20% margin.
How do I find the selling price from cost and a target margin?
Divide cost by (1 − margin). For a 30% margin on a $70.00 cost, price = $70.00 ÷ 0.70 = $100.00. Multiplying cost by 1.30 instead gives $91.00, which is a 30% markup and only a 23.08% margin.
What is a good gross margin?
It depends on the industry and the business model. Businesses that resell physical goods with high volume often run on thinner gross margins than software or services firms, and the margin you need depends on how much overhead, sales cost and financing the gross profit has to cover. Compare your margin with businesses like yours and with your own operating costs rather than with a single universal number.