Markup Calculator – Price, Profit and the Margin It Really Gives You
Set a selling price from your cost and a markup percentage — and immediately see the profit margin that markup actually delivers. Markup and margin are two different numbers wearing very similar clothes, and pricing from the wrong one quietly shrinks every sale. This calculator works in all three directions and shows both percentages, side by side, every time.
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Your price and profit
Read the margin, not just the markup
A 25.00% markup on $100.00 gives you a 20.00% margin — the same $25.00 of profit, measured against two different bases. The table below shows where your markup lands.
How to read this: markup divides profit by your cost; margin divides the same profit by the selling price. The profit dollars never change — only the yardstick does. Quote markup when you build a price, but judge the business on margin, because rent, fees and tax all come out of the price, not the cost.
- Margin is always smaller than the markup that produced it: markup divides profit by the cost, margin by the price — a 25% markup on $100 gives a 20% margin.
- Start from a true, complete cost — buy price plus packaging, shipping-in and preparation — or the markup builds a too-small price.
- A discount bites harder than the markup helped, because the discount comes off the price while the markup was added to the cost.
Every markup hides a smaller margin
The same profit, two percentages. Because margin is measured against the bigger number — the price — it always comes out smaller than the markup that produced it. Find your markup in the table: the row lights up as you calculate, so you can see exactly which margin your pricing really earns.
| If you mark up by | Your margin is | On a $100 cost |
|---|---|---|
| 10% markup | 9.09% margin | Price $110.00 · profit $10.00 |
| 20% markup | 16.67% margin | Price $120.00 · profit $20.00 |
| 25% markup | 20.00% margin | Price $125.00 · profit $25.00 |
| 33.33% markup | 25.00% margin | Price $133.33 · profit $33.33 |
| 50% markup | 33.33% margin | Price $150.00 · profit $50.00 |
| 100% markup | 50.00% margin | Price $200.00 · profit $100.00 |
Your current markup of 25.00% sits on the highlighted row: it earns a 20.00% margin.
⚠ The trap: 25% markup is not a 25% margin
Take a product that costs you $100. Add a 25% markup and the price is $125, with $25 of profit. But that $25 is only 20% of the $125 your customer pays — a 20% margin, not 25%. If you priced expecting to keep 25% of every sale, you just gave away 5 points of profit on every single unit.
It gets sharper with discounts: knock 20% off that $125 price in a sale and you land at exactly $100 — your cost. A 20% discount completely erases a 25% markup, because the discount is taken off the price while the markup was added to the cost. The third mode of this calculator exists for exactly this reason: start from the margin you need, and let it work out the price — and the markup — that truly delivers it.
How it works, in 3 steps
Start from a true cost
Use the full cost of one unit — what you paid for it, plus packaging, shipping-in and anything else you spend before it can be sold. A markup on a too-small cost is a too-small price.
Pick your direction
Know the markup you want? Mode one builds the price. Already have a price? Mode two reads its markup and margin. Know the margin the business needs? Mode three works backwards to the price that delivers it.
Check both percentages
Whatever you entered, read the other percentage before you commit. The markup builds the price; the margin tells you whether the business survives on it.
The maths behind the three modes
Mode 1 — cost plus markup. Cost $100, markup 25%: price = $100 × (1 + 0.25) = $125.00. Profit is $125 − $100 = $25.00, and the margin is $25 ÷ $125 = 20.00%. One profit, two percentages: 25% of the cost, 20% of the price.
Mode 2 — cost and price. Cost $80, price $120: profit is $40. Markup = $40 ÷ $80 = 50.00%; margin = $40 ÷ $120 = 33.33%. The gap between the two widens as the numbers grow — at high markups the margin looks deceptively small next to it, which is why margin is capped at 100% while markup is not.
Mode 3 — cost plus target margin. You want a 30% margin on a $70 cost. Price = $70 ÷ (1 − 0.30) = $100.00 — dividing, not multiplying, because the margin is a share of the price itself. The markup that price represents is $30 ÷ $70 = 42.86%. Had you simply added 30% markup instead, the price would have been $91 and the margin only 23.08% — the classic under-pricing mistake, made silently.
Converting directly. Margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin), with both written as decimals. So a 50% markup is 0.50 ÷ 1.50 = a 33.33% margin, and a 20% margin needs 0.20 ÷ 0.80 = a 25% markup. The conversion table above is just this formula, pre-computed for the markups people reach for most.
Deep dives
Markup and margin share a numerator — the profit — and differ only in what you divide it by. Markup divides by cost, the money you put in. Margin divides by price, the money that comes back. Because the price is always the bigger of the two, the margin is always the smaller percentage, and the two drift further apart as profit grows: at a $10 profit on a $100 cost they are 10% and 9.09%, close enough to confuse; at a $100 profit they are 100% and 50%, impossible to mix up but easy to misquote.
This is also why margin can never reach 100% while markup has no ceiling. A 100% margin would mean the entire price is profit — the product cost nothing — and any margin above that would require a negative cost. Markup simply counts how many times over you recover your cost inside the price: 100% markup recovers it twice (once as cost, once as profit), 200% three times, and so on. When a supplier quotes you a “margin” and a retailer hears a “markup”, both can be describing the same deal with different numbers — which is exactly why good pricing conversations state the base out loud.
Pricing off the wrong base. The most expensive habit in small-business pricing is adding the margin you want as if it were a markup. Wanting a 40% margin and adding 40% to cost delivers a margin of only 28.57% — more than eleven points of profit surrendered on every sale, indefinitely. Mode three of this calculator is the antidote: give it the margin, take the price it returns.
Forgetting that discounts eat from the price. A discount percentage is always taken off the selling price, so it bites harder than the same percentage added as markup. As the trap card shows, a 20% discount exactly cancels a 25% markup on a $100 cost. Before any promotion, run the discounted price through mode two and read the margin that survives — that is the number the promotion really costs you.
Marking up an incomplete cost. Markup can only protect profit that the cost figure honestly includes. Marketplace fees, payment processing, packaging, returns and shipping subsidies all come out of the price in the end; leave them out of the cost and the margin the calculator shows is a margin you will never see. When in doubt, fold the per-unit share of those costs into the cost field and let the percentages tell the truth.
Three prices, worked in full
The three modes of this calculator are one relationship seen from three sides, and the easiest way to trust them is to watch the same arithmetic run on three different products. Each row below starts from a different known pair and lands on the same three outputs: price, profit per unit, and the margin that price really delivers. Run any row through the calculator yourself — mode one for the first two rows, mode three for the third — and you will get the same figures.
| Case | What you know | Price | Profit per unit | Margin |
|---|---|---|---|---|
| Small item, strong markup | Cost $40, markup 60% | $64.00 | $24.00 | 37.50% |
| Large item, gentle markup | Cost $250, markup 20% | $300.00 | $50.00 | 16.67% |
| Margin-led pricing | Cost $60, target margin 40% | $100.00 | $40.00 | 40.00% (markup 66.67%) |
Case one is the small item with room to breathe. A $40 cost with a 60% markup gives a price of $40 × 1.60 = $64.00, so the profit is $24.00. The margin is that $24.00 measured against the $64.00 price: $24 ÷ $64 = 37.50%. Notice how far the margin sits below the markup even here — a 60% markup keeps barely more than a third of the price. That gap is the whole reason this page shows both numbers every time: quoting the 60% figure to yourself as if it were the share you keep would overstate your cushion by more than twenty points.
Case two is the opposite shape, and it is where most pricing mistakes hide. A $250 cost with a 20% markup gives $250 × 1.20 = $300.00, a profit of $50.00, and a margin of $50 ÷ $300 = 16.67%. Fifty dollars of profit sounds comfortable until you remember that every cost of selling — fees, shipping subsidies, returns, tax — comes out of the $300 price, not the $250 cost. A business running on a 16.67% margin has $50 per unit to cover all of that and still leave a profit; a business that thought it had a 20% margin has budgeted $60 per unit that does not exist. On large-ticket items the percentage gap looks small and the dollar gap is large, which is exactly backwards from how it feels.
Case three turns the problem around, and it is the mode to reach for whenever you already know what the business needs. A $60 cost with a 40% margin target gives a price of $60 ÷ (1 − 0.40) = $60 ÷ 0.60 = $100.00, a profit of $40.00, and a markup of $40 ÷ $60 = 66.67%. The division is the part people get wrong: because the margin is a share of the price itself, you divide by what remains after the margin, you do not multiply by the margin. Adding 40% as a markup instead would price the item at $84.00 and leave a margin of only 28.57% — more than eleven points short of the target, on every unit, indefinitely. Whenever the target is a margin, start from the margin.
One more reading of the table is worth making, because it answers the question every new seller asks: which row is “best”? None of them, on these numbers alone. A 37.50% margin on a $40 item leaves $24 per sale; a 16.67% margin on a $250 item leaves $50. The margin percentage tells you how much of each sale survives; the profit dollars tell you how much money each sale makes; and neither tells you how many units you will sell at that price. Price, margin and volume have to be judged together, and the calculator deliberately shows you the first two so the third — your market judgement — has honest inputs to work with.
What a discount does to your margin
Discounts are where markup pricing quietly breaks, because a discount percentage and a markup percentage are measured against different bases. The markup was added to the cost; the discount is taken off the price. The same number therefore bites harder as a discount than it helped as a markup, and the table below shows the damage on the page’s own default product: a $100 cost priced at $125 with a 25% markup and a 20% margin.
| Discount off $125 | Sale price | Profit per unit | Margin left |
|---|---|---|---|
| No discount | $125.00 | $25.00 | 20.00% |
| 10% off | $112.50 | $12.50 | 11.11% |
| 20% off | $100.00 | $0.00 | 0.00% |
| 25% off | $93.75 | −$6.25 | −6.67% |
Read the second row twice, because it surprises almost everyone. A 10% discount does not take 10% off your margin — it takes nearly half of it. The price falls from $125.00 to $112.50, the profit falls from $25.00 to $12.50, and the margin falls from 20.00% to 11.11%, because the $12.50 that remains is now measured against a smaller price. Discounts eat profit dollars first and margin percentage second, and both fall faster than the discount percentage suggests. The third row is the cliff edge the trap card on this page warns about: a 20% discount on a 25%-markup price returns you exactly to cost, and the fourth row is what lies past it — a 25% discount does not merely remove the profit, it sells below cost at a loss of $6.25 per unit, a margin of −6.67%.
There is a clean general rule behind the table, and it is worth memorising. The discount that exactly wipes out your profit is equal to your margin percentage, not your markup percentage. A 20% margin survives a discount of up to 20% and no further; a 25% markup, which sounds like it should survive a 25% discount, does not survive a 20% one. So before any promotion, sale or “just this once” price cut, run the discounted price through mode two of this calculator and read the margin that survives. If the surviving margin still covers everything that comes out of the price — fees, shipping, returns, tax — the promotion is affordable. If it does not, the promotion is not a marketing cost; it is a loss disguised as a sale, and no volume of it will fix the arithmetic, because every extra unit sold at a loss loses the same $6.25 again.
This is also why the discount question has to be asked before the price is set, not after. A price built with discount headroom — a margin deliberately larger than the discount you plan to offer — survives promotions intact. A price built with no headroom forces a choice between refusing the promotion and selling at a loss. If you know a seasonal sale is coming, build the margin for the discounted price, not the list price: decide the lowest price you will ever charge, work out the margin that price must deliver, and let mode three give you the list price that makes both numbers true at once.
Starting from the margin your business needs
Most pricing advice starts from the product. Better pricing starts from the business, because the margin is not a preference — it is a requirement set by everything that has to be paid out of the price. Rent, staff time, marketplace and payment fees, packaging, shipping subsidies, returns and tax all come out of the selling price, never out of the cost. The margin you need is therefore the share of the price those claims will take, plus the profit you intend to keep. Once that share is known, mode three does the rest, and two more worked cases show how sensitive the answer is to the target.
Take a $80 cost with a 35% margin target. The price is $80 ÷ (1 − 0.35) = $80 ÷ 0.65 = $123.08, the profit is $43.08, and the markup that price represents is $43.08 ÷ $80 = 53.85%. Now take a $200 cost with a 15% margin target: the price is $200 ÷ (1 − 0.15) = $200 ÷ 0.85 = $235.29, the profit is $35.29, and the markup is $35.29 ÷ $200 = 17.65%. Compare the two markups with the two margins. A 35% margin needs a 53.85% markup; a 15% margin needs a 17.65% markup. The markup is always the larger number, and the gap between them grows as the margin grows — at a 40% margin the markup is 66.67%, at a 15% margin it is only 17.65%. Anyone who copies a competitor’s markup without knowing the competitor’s margin target is copying the wrong number.
The practical workflow follows from this. First, add up what each sale must carry: the per-unit share of the costs that come out of price, and the profit you need to keep. Second, express that total as a share of the price you will charge — that is your target margin. Third, put the cost and the target margin into mode three and take the price it returns, even when the markup it implies looks surprisingly large. Fourth, sanity-check the result against the market: if the price the margin demands is one customers will not pay, the problem is not the arithmetic, it is the cost base or the volume — and the honest responses are to cut costs, sell more units, or accept a smaller profit, not to quietly price below the margin and hope the shortfall never arrives. It always arrives, in the form of a month where the money coming in does not cover the money going out.
A final caution about rounding, because it matters on small items. The calculator shows prices to the cent, and the worked figures above are rounded the same way: $123.08, not $123.0769. On a $200 item a cent of rounding is noise; on a $2 item priced from a tight margin, rounding the price down by a few cents can move the margin by a visible amount. When the margin is thin, round prices up, not down, and re-check the rounded price in mode two before publishing it. The true price is the one customers actually pay, and the true margin is the one that price delivers.
Five checks before you publish a price
Use this list as a last pass over any price this calculator produces. Each check catches a different way a mathematically correct price can still be wrong, and each one takes less than a minute.
1. Is the cost complete? The cost field must carry everything spent before the item can be sold: the buy price plus packaging, shipping-in and any preparation. A markup on a too-small cost is a too-small price, and no later correction recovers the margin lost on units already sold. When in doubt, fold the per-unit share of a doubtful cost into the cost field and let the percentages tell the truth.
2. Have tax, fees and fulfilment been accounted for? This calculator does not add sales tax, VAT, marketplace or payment fees, shipping, or the cost of returns unless you include them in the cost per unit. That exclusion is stated here plainly so it is never mistaken for an oversight: the tool prices from the numbers you give it, and the numbers you give it must already contain everything the price has to pay for.
3. Does the margin survive your discount? Run the lowest price you will ever charge — the sale price, the bundle price, the loyal-customer price — through mode two. The margin that survives is the margin the business actually runs on. If it is negative, the discount is a loss, not a promotion.
4. Is the price one customers will pay? A price can be mathematically perfect and still wrong for the market. The calculator cannot know what customers will pay, what competitors charge, or what the product is worth in their eyes. Treat the output as the pricing floor your margin requires, and sense-check it against the market before committing to it.
5. Does the total work at your volume? On load, this page shows the default display of 250 units sold, $6,250.00 of total profit and $31,250.00 of total revenue on the $25.00 per-unit profit — the per-unit figure multiplied out. Fill in your own expected units to see your own totals, because a healthy per-unit margin on ten units a month and the same margin on ten thousand are very different businesses. The margin decides whether each sale helps; the volume decides whether the business survives.
Markup versus margin: the conversion to memorise
Markup divides by cost, margin divides by price, and the two diverge fast. A 60 percent markup is a 37.5 percent margin, and a 40 percent margin needs a 66.7 percent markup. The companion guide carries the full conversion table and the discount arithmetic.
The discount reality check
A 25 percent discount on a $40 price with $25 cost cuts the realised markup from 60 percent to 20 percent and the margin to 16.7 percent. Judge promotions on the discounted margin, never on the original markup.
Markup questions, answered
What is markup?
Markup is the percentage added to the cost of a product to set its selling price. It is the profit measured against what the product cost you: a $100 item sold for $125 carries $25 of profit, and $25 divided by the $100 cost is a 25% markup. Price from a markup is cost times one plus the markup rate, so a 25% markup on $100 gives $100 × 1.25 = $125.
What is the difference between markup and margin?
Both describe the same profit — they just divide it by different things. Markup divides profit by the cost; margin divides profit by the selling price. Because the price is bigger than the cost, the margin is always the smaller number: a 25% markup is a 20% margin, a 50% markup is a 33.33% margin, and a 100% markup is a 50% margin. Margin can never exceed 100%, while markup has no upper limit.
How do I convert markup to margin, and back?
With both written as decimals: margin = markup divided by (1 + markup), and markup = margin divided by (1 − margin). So a 50% markup becomes 0.50 ÷ 1.50 = a 33.33% margin, and a 20% margin needs 0.20 ÷ 0.80 = a 25% markup. The conversion table on this page pre-computes the common pairs, and the calculator itself always shows both figures so you rarely need the formula by hand.
What markup do I need for a 30% margin?
A 42.86% markup. Work it through: markup = margin ÷ (1 − margin) = 0.30 ÷ 0.70 = 42.86%. On a $70 cost, that means a price of $70 ÷ 0.70 = $100, of which $30 is profit — exactly 30% of the price. Adding only 30% markup instead would price the item at $91 and leave a margin of 23.08%, which is the single most common pricing mistake this page exists to prevent. Mode three does this conversion for any margin you type in.
Is a 100% markup the same as a 100% margin?
No — and the gap is the whole point of this page. A 100% markup doubles the cost: a $100 product sells for $200, and the $100 profit is a 50% margin, not 100%. A 100% margin would mean the entire selling price is profit, which only happens if the product cost you nothing; a margin above 100% is impossible, because profit cannot exceed the price it is measured against. Markup has no such ceiling — a 300% markup simply means the price is four times the cost, and its margin is 75%.
What is a good markup percentage?
There is no universal number — it depends on what the margin has to cover after the sale. Doubling cost (a 100% markup, often called keystone pricing in retail) leaves a 50% margin to pay rent, staff, fees and tax. Sellers with thin overheads can thrive on far less, while high-service or high-risk lines need more. The honest way to choose: work out the margin your costs demand, then use mode three to turn that margin into the markup and price that actually deliver it, rather than copying a percentage from another business whose costs are not yours.
Can markup be negative?
Yes — whenever the selling price sits below the cost. A $100 item sold for $90 carries a loss of $10, which is a markup of −$10 ÷ $100 = −10.00% and a margin of −$10 ÷ $90 = −11.11%. The margin is again the larger-magnitude number, because it is measured against the smaller base. A negative markup is not a pricing strategy; it is the arithmetic signature of selling below cost, and it appears in the discount table on this page wherever a discount pushes the price under the cost line. If you see one, the price — not the formula — needs fixing.
If I double my markup, does my margin double?
No, and the gap is a useful intuition check. Doubling a 25% markup to 50% moves the margin from 20.00% to only 33.33% — a real gain, but far from double. The reason is the denominator: every extra point of markup raises the price as well as the profit, so the margin, which divides by the price, grows more slowly than the markup, which divides by the fixed cost. Margins compress towards 100% as markups grow without limit: a 100% markup is a 50% margin, a 300% markup is a 75% margin, and no markup, however large, ever reaches a 100% margin. Judge a price rise by the margin it delivers, not by how impressive the markup sounds.
Should I price from markup or from margin?
Use markup to build a price and margin to judge it — and when the two disagree, let the margin win. Markup is the natural building tool because you start from a known cost and add a percentage. Margin is the natural judging tool because rent, fees and tax all come out of the price. The workflow that respects both is: decide the margin the business needs, use mode three to turn that margin into a price, and then read the markup that price implies only as a check. Pricing from a copied markup, without ever stating the margin it delivers, is how businesses end up working hard on sales that keep too little of each price.
Does this calculator include tax or fees in the price?
No. The calculator works purely on the numbers you enter: it does not add sales tax, VAT, marketplace or payment fees, shipping, or the cost of returns. If those costs come out of your selling price, fold their per-unit share into the cost field before you calculate, so the margin shown is the margin you will actually see. If instead you charge tax or shipping on top of the price, keep them out of the cost and add them after — the choice depends on how your customers are billed, but whichever route you take, the margin is only honest if every cost the price must carry is already inside the calculation.
Is markup always bigger than margin?
Yes, on any profitable product, because markup divides by the smaller number, cost. At a 50 percent margin the markup is already 100 percent, and it rises without limit as margin approaches 100 percent.
Can I price from a target margin using markup?
Yes, with the conversion: markup equals margin divided by one minus margin. A 40 percent margin target needs a 66.7 percent markup on cost.
Does the calculator work backwards from price?
Yes. Enter cost and price to get markup and margin, or enter cost and a target markup to get the price. All four directions solve from any two numbers.
Related guides
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Straightforward pricing maths — check the inputs before you rely on the price.
Every figure on this page is exact arithmetic on the numbers you enter, but the result is only as honest as the cost you start from. The calculator does not add sales tax, VAT, marketplace or payment fees, shipping, or the cost of returns unless you include them in the cost per unit, and it cannot know your market: a price can be mathematically perfect and still wrong for what customers will pay. Treat the output as the pricing floor your margin requires, and sense-check it against your market before you commit to it.
Price from the margin you need, not the markup you are used to — the difference is profit you keep on every single sale.
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