Markup Calculator
Free markup calculator. Set a selling price from cost and markup %, or back out the markup. Always shows gross margin too. No signup.
Markup vs margin: the distinction that costs money
Markup and margin both describe profit, but they measure it against different bases, and mixing them up is one of the most expensive pricing errors in small business. Markup is the percentage of the cost you add on top. Margin is the percentage of the selling price that ends up as profit. This calculator gives you both from one set of inputs, so you can price from cost or work backwards from an existing selling price.
How the calculator works
- Cost + markup → price: selling price = cost + (cost × markup ÷ 100). Profit is the difference, and gross margin = profit ÷ selling price × 100.
- Cost + price → markup: markup % = (price − cost) ÷ cost × 100, and margin = (price − cost) ÷ price × 100.
- Both modes display the profit and the gross margin, because the markup figure alone hides the margin most people actually care about.
A worked example
An item costs $50 and you apply a 40% markup:
| Item | Value |
|---|---|
| Cost price | $50.00 |
| Markup | 40% |
| Selling price | $70.00 |
| Profit per unit | $20.00 |
| Gross margin | 28.6% |
The same numbers in reverse: cost $50 and price $70 give a markup of 40% and a margin of 28.6%. The profit is identical — only the denominator changes.
Markup to margin conversion
| Markup | Margin |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20.0% |
| 33.3% | 25.0% |
| 40% | 28.6% |
| 50% | 33.3% |
| 100% | 50.0% |
Margin is always the smaller number, and the gap widens as the markup grows. Margin can never reach 100% off a positive cost.
Common mistakes
- Treating markup and margin as the same. A 40% markup is a 28.6% margin; pricing as if they were equal quietly gives away about a quarter of your intended profit.
- Adding markup to the selling price. Markup is always calculated on cost, not on the price you hope to charge.
- Ignoring fees and shipping. Payment processing, packaging, and delivery eat into margin, not markup, so take them off the price before calling the profit real.
- Setting margin as a round markup. If you want a 30% margin, the required markup is 42.9%, not 30%.
Pricing to a target margin
If you want a specific margin rather than a specific markup, work backwards: markup = margin ÷ (1 − margin). A 40% target margin needs a 66.7% markup, so a $30 cost must sell for $50. Enter that markup in the first mode and the tool confirms the margin lands on 40%.
Discounting deserves the same check. A 10% discount on a product carrying a 28.6% margin removes more than a third of the profit, because the discount comes straight off the selling price while the cost stays fixed. Always test the discounted price against cost before agreeing to it.
Frequently asked questions
How do I price for a target margin?
Convert margin to markup first: markup = margin ÷ (1 − margin). A 30% target margin needs a 42.9% markup; a 20% margin needs 25%. Then apply it to your cost.
Which is more useful, markup or margin?
Use markup to set prices from cost, and margin to judge whether a price leaves enough after everything is paid for. Accounting and lending usually talk in margin, so it is worth knowing both.
Why is my margin lower than my markup?
Because margin divides profit by the larger selling price while markup divides it by the smaller cost. The same dollar of profit looks smaller as a share of the price than as a share of the cost.
Does this account for tax?
No — it works in pre-tax terms. Sales tax sits outside the price as far as your margin is concerned, and income tax comes off the profit later. A percentage calculator is useful if you want to model a discount on top, and the invoice generator applies a tax rate to what you charge.