Profit margin and markup calculator
Work out your margin and markup from cost and price, or find the price you need to hit a target margin.
Margin vs markup
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. They describe the same profit, but the numbers differ, and mixing them up is one of the most common pricing mistakes.
- Margin = (price − cost) ÷ price
- Markup = (price − cost) ÷ cost
- Price for a target margin = cost ÷ (1 − margin)
Worked example
A product costs 60 and sells for 100. Profit is 40, so the margin is 40% and the markup is 66.7%. Adding 40% to the cost instead gives a price of 84, which is only a 28.6% margin.
Getting the inputs right
- Use prices before VAT or sales tax
- Include delivery, packaging, payment and marketplace fees in the cost
- Work out margin by product or customer, not just in total, to find where profit leaks
A planning tool, not financial advice.
Common questions
Is margin or markup better to use?
Use margin to compare products and read your accounts, because accounts report gross margin. Markup is handy when you set prices from cost. Just don't confuse the two.
What is a good profit margin?
It varies widely by industry. Compare your gross margin with your own history and with similar businesses, and watch the trend month by month.
Should the cost include overheads like rent?
Not for gross margin. Use direct costs per unit here, and cover overheads with our break-even calculator.
Step one is free
Fix the leaks. Build the company.
Start with a free 20-minute Leak Check, online, wherever you are. Tell us where money feels tight and we'll show you where it's slipping away.
Or email info@sfglobalconsulting.com, or DM “LEAK” to @shazfinedge on Instagram.