CalcMate

Margin Calculator

Work out the profit margin and markup on a sale, or flip it around: enter the margin you want to keep and see what the item has to sell for.

Profit margin40%share of the selling price
Profit per sale$40.00
Markup share of the cost66.67%
Selling price$100.00

Markup is always the bigger number on a profitable sale: the same profit divided by the cost instead of the price.

Formula and calculation

margin=price−costprice×100markup=price−costcost×100reverse: price=cost1−margin100\begin{gathered}\text{margin} = \dfrac{\text{price} - \text{cost}}{\text{price}} \times 100\\[6pt]\text{markup} = \dfrac{\text{price} - \text{cost}}{\text{cost}} \times 100\\[6pt]\text{reverse: } \text{price} = \dfrac{\text{cost}}{1 - \frac{\text{margin}}{100}}\end{gathered}
Standard profit-margin definitions: the same profit measured against two different bases — margin against the selling price, markup against the cost. Reverse mode inverts the margin formula to price from a target.

Worked example

An item costs $100 and sells for $150. The profit is $50.00, which is a 33.33% profit margin and a 50% markup. The margin is the smaller of the two because it is measured against the selling price instead of the cost.

Margin and markup are not the same number

Margin asks how much of the selling price you keep: $50 profit on a $150 sale is 33.3%. Markup asks how much you added to the cost: the same $50 on a $100 cost is 50%. Quote one when you mean the other and you misprice — aim for a 50% margin but price with a 50% markup and you earn 33% instead, a third of the margin you planned. The conversion is short: markup = margin ÷ (1 − margin), and margin = markup ÷ (1 + markup). The table in the results lists the pairs you will use most.

What the results mean

Profit margin
Profit as a percentage of the selling price — the number finance people mean by margin. A 30% margin leaves 30 cents of every sales dollar as profit.
Markup
Profit as a percentage of the cost — how much you add on top of what you paid. For the same sale, markup is always the higher number: a 20% margin is a 25% markup.
Profit per sale
Selling price minus cost, in dollars, per unit sold. It turns negative if you sell below cost.
Selling price
The price the item sells at: the price you entered, or the price that delivers your target margin.

Frequently asked questions

What is the difference between margin and markup?

Margin is profit divided by the selling price; markup is profit divided by the cost. An item bought for $100 and sold for $150 carries $50 of profit — a 33.3% margin but a 50% markup. They are only equal when the profit is zero.

How do I calculate a selling price for a 30% margin?

Divide the cost by 1 minus the margin: for a 30% margin, cost ÷ 0.7. A $70 cost needs a price of $100. Switch the calculator to the second mode, enter the cost and the target margin, and it returns the price and the matching markup.

Is a 50% markup the same as a 50% margin?

No. A 50% markup on a $100 cost gives a $150 price, which is only a 33.3% margin. For a true 50% margin you need a 100% markup — sell at double your cost.

What is a good profit margin?

It depends on the business: grocery stores live on thin margins, software companies on wide ones. Compare with your own industry's typical range rather than a single number, and remember that this calculator's cost field has to cover overhead too if the margin is to become real profit.

Can the profit margin be negative?

Yes — selling below cost gives a negative margin and a negative markup, and the calculator shows them with a minus sign rather than treating them as errors.