Margin Calculator
Enter what an item costs you and the price you sell it for, then press Calculate. The calculator shows the gross profit, the profit margin and the markup, with each percentage rounded to 2 decimal places. To go the other way, choose Price from margin and enter the cost and the margin you want. The calculator shows the selling price, rounded to the cent, with the profit and markup at that price.
How to use the Margin Calculator
- Enter your numbers in the Margin Calculator above.
- Press the Calculate button to see the result.
- To try other numbers, change any value and press the button again.
The margin formulas
Profit margin = (Revenue − Cost) / Revenue · · · Markup = (Revenue − Cost) / Cost · · · Selling price = Cost / (1 − target margin)
Margin and markup measure the same gap against different amounts. Margin divides the profit by the selling price, markup divides it by the cost. A 50% margin equals a 100% markup. A margin always stays below 100%, while a markup can go far above it. When the price is below the cost, the profit, the margin and the markup all come out negative. The selling price comes from the first formula solved for revenue. A target margin of 100% has no price, because the formula divides by 0.
Worked example
An item costs $40 and sells for $100. The calculator shows a gross profit of $60.00, a profit margin of (100 − 40) / 100 = 60% and a markup of (100 − 40) / 40 = 150%. For a 40% margin on the same $40 cost, choose Price from margin and enter $40 and 40%. The calculator shows a selling price of 40 / (1 − 0.40) ≈ $66.67, a gross profit of $26.67 and a markup of 66.68%.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percent of the selling price. Markup is profit as a percent of the cost. The dollar profit is the same, but the denominator differs, so the percentages differ. $40 cost and $100 price is a 60% margin and a 150% markup.
What happens if I sell below cost?
The gross profit is negative, and so are the margin and the markup. An item that costs $50 and sells for $40 shows a gross profit of −$10.00, a margin of −25% and a markup of −20%.
How do I find the selling price from a margin?
Choose Price from margin and enter the cost and the target margin. Price = Cost / (1 − target margin). For a 30% margin on a $50 cost, 50 / 0.70 = $71.43, which leaves a gross profit of $21.43 and a markup of 42.86%. Enter $50 and $71.43 in the other mode and it shows the same 30% margin.
Why can the margin differ from my target?
The price is rounded to the cent, so the margin at that price can land just above or below your target. On a $0.10 cost at 33%, the exact price is $0.149…, which rounds to $0.15 and gives a margin of 33.33%. Margin at This Price shows the figure you actually get.
Why does adding the margin percent to the cost give the wrong price?
Because that is a markup. Adding 30% to a $50 cost gives $65.00, and $15 of profit on a $65 price is a 23.08% margin. A margin is a share of the price, so the price has to be $71.43 for $21.43 to be 30% of it.