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Margin & markup
Compare profit to selling price (margin) and to cost (markup).
Key difference: margin divides profit by selling price. Markup divides the same profit by cost.
FREE CALCULATOR · BUSINESS
Margin & Markup Calculator
Margin and markup both describe profit as a percentage — but of different things, and mixing them up is expensive. Enter cost and selling price to see both, side by side.
How the margin & markup calculator works
Margin and markup both describe profit as a percentage — but of different things, and mixing them up is expensive. Enter cost and selling price to see both, side by side.
The formula
margin = (price − cost) ÷ price × 100 · markup = (price − cost) ÷ cost × 100
Worked example
You buy an item for $60 and sell it for $100. Profit is $40. Margin is 40 ÷ 100 = 40%. Markup is 40 ÷ 60 ≈ 66.7%. Same $40 profit, two different percentages.
Where this comes in handy
- Pricing: set prices that hit your target margin.
- Reselling: check whether a flip is worth the effort.
- Restaurants and retail: monitor margins across products.
- Freelancing: compare your effective markup on time vs. materials.
Margin & Markup Calculator — frequently asked questions
What is the difference between margin and markup?
Margin is profit as a share of the selling price; markup is profit as a share of the cost. A 40% margin on a $100 sale equals a 66.7% markup on its $60 cost.
Why is markup always higher than margin?
Because markup divides by the smaller number (cost). For any profitable sale, markup exceeds margin — sometimes dramatically.
What is a good profit margin?
It varies wildly by industry: grocery stores run 1–3%, while software can exceed 70%. Compare against your own industry, not a universal rule.
How do I price for a target margin?
Divide your cost by (1 − margin as a decimal). For a 40% margin on a $60 cost: 60 ÷ 0.60 = $100.
Can margin exceed 100%?
Gross margin cannot exceed 100% (you cannot profit more than the price). Markup has no upper limit.