$40 cost with a 50% markup
Sells for $60 with $20 of profit, a 33.33% margin.
Markup calculator
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Markup is profit as a share of cost. Margin is profit as a share of the selling price. Sales tax, discounts and payment fees are not included.
%
Selling price
$60.00
A 50% markup on $40.00 adds $20.00 of profit. That is a 33.33% margin on the selling price.
- Profit
- $20.00
- Markup
- 50.00%
- Margin
- 33.33%
Cost$40.00
Profit$20.00
Selling price$60.00
Markup needed for a target margin, on a cost of $40.00
| Target margin | Markup needed | Selling price |
|---|---|---|
| 10% | 11.11% | $44.44 |
| 20% | 25.00% | $50.00 |
| 25% | 33.33% | $53.33 |
| 30% | 42.86% | $57.14 |
| 40% | 66.67% | $66.67 |
| 50% | 100.00% | $80.00 |
| 60% | 150.00% | $100.00 |
| 75% | 300.00% | $160.00 |
Markup and margin are not the same number
Pricing goes wrong most often when someone means margin and says markup. Both are percentages of the same profit, but markup compares the profit to what you paid and margin compares it to what you charge. Because the price is bigger than the cost, the margin is always the smaller figure.
Say an item costs $40 and you add a 50% markup. The selling price is $60 and the profit is $20. That $20 is 50% of the cost but only 33.33% of the price, so the margin is 33.33%.
Going the other way, if you need a 30% margin on everything you sell, you need a markup of 42.86%. On a $40 cost that is a price of $57.14. A 50% margin needs a 100% markup, or a price of $80.
Most business costs, such as rent, staff and card fees, are paid out of margin. That is why accountants talk in margin, while shop floors often set prices with a markup. The table under the result lets you translate between the two.
Sources
What this calculator does not account for
- Covers one item; overheads are not included.
- Sales tax is not added.
How this is calculated
Formula: Markup and margin
price =cost × (1 + markup ÷ 100); margin =(price − cost) ÷ price × 100What the symbols mean
- markupProfit as a share of cost.
- marginProfit as a share of the selling price.
- markup for a target marginmargin ÷ (100 − margin) × 100.
Good to know
- Margin is always smaller than markup for the same price.
- To start from a price and find the margin, use the profit margin calculator.
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Worked examples
Each example is worked out by the same code as the calculator above.
30% target margin on a $40 cost
A 42.86% markup, or a price of $57.14.
Embed this calculator
The frame shows the tool only.
<iframe src="/embed/markup-calculator" title="Markup" width="100%" height="720" style="border:0;max-width:42rem" loading="lazy"></iframe>Questions
What is the difference between markup and margin?
Both measure the same profit. Markup divides it by cost; margin divides it by the selling price. A 50% markup is a 33.33% margin.
How do I calculate markup?
Subtract the cost from the price, divide by the cost and multiply by 100. A $40 item sold for $60 has a 50% markup.
What markup gives a 30% margin?
42.86%. Divide 30 by 70 and multiply by 100.
What is a 100% markup?
Doubling the cost. A $40 item sells for $80, which is a 50% margin.
What is a good markup for retail?
It varies by trade. Clothing and jewellery often use 100% or more, while groceries may work on 10% to 30%.