Calculate your markup percentage, profit margin, and selling price instantly. Understanding the difference between markup and margin is essential for pricing products correctly and maximizing profitability.
How This Calculator Works
> [!IMPORTANT] > Common Pricing Mistake: Many business owners confuse markup with margin, leading to pricing errors that significantly impact profitability. A 50% markup results in only a 33.3% margin — not 50%!
This free markup/margin calculator helps you:
- Calculate Profit from cost and selling price
- Find Markup Percentage based on your cost
- Find Profit Margin as a percentage of revenue
- Understand the Relationship between these critical metrics
Markup vs Margin: What's the Difference?
| Metric | Formula | Based On |
| Markup | (Sale Price - Cost) ÷ Cost × 100 | Cost |
| Margin | (Sale Price - Cost) ÷ Sale Price × 100 | Revenue |
> [!TIP] > Quick Rule: Markup is always a larger number than margin for the same profit amount. Use markup when setting prices, margin when analyzing profitability.
Markup to Margin Conversion Chart
| Markup % | Margin % |
| 20% | 16.7% |
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 75% | 42.9% |
| 100% | 50% |
Step-by-Step Example
Scenario: You buy a product for $60 and sell it for $100
| Metric | Calculation | Result |
| Cost | Given | $60 |
| Selling Price | Given | $100 |
| Profit | $100 - $60 | $40 |
| Markup % | ($40 ÷ $60) × 100 | 66.7% |
| Margin % | ($40 ÷ $100) × 100 | 40% |
Industry Average Profit Margins
| Industry | Typical Margin |
| Grocery/Supermarket | 2-3% |
| Retail Clothing | 4-8% |
| Restaurants | 3-5% |
| E-commerce | 10-20% |
| Software/SaaS | 70-90% |
| Professional Services | 15-25% |
Frequently Asked Questions
What is a good profit margin?
It depends on your industry. Retail typically sees 2-5%, while software can reach 70%+. Research your industry benchmarks and aim to exceed the average.
How do I price my products?
Start with your total cost (product + shipping + overhead), decide on your target markup percentage, then calculate: Selling Price = Cost × (1 + Markup%/100)
Why is margin always lower than markup?
Because markup is based on the smaller number (cost), while margin is based on the larger number (selling price). Same profit, different denominators.
Should I use markup or margin?
- Use markup when setting prices from your costs
- Use margin for financial reporting and benchmarking
Key Formulas to Remember
Profit = Selling Price - Cost
Markup % = (Profit / Cost) × 100
Margin % = (Profit / Selling Price) × 100
Selling Price = Cost × (1 + Markup%/100)
Cost = Selling Price × (1 - Margin%/100)
When to Use This Calculator
- Pricing new products for your store or e-commerce site
- Comparing profitability across different product lines
- Setting wholesale vs retail prices with different markups
- Analyzing competitor pricing strategies
- Preparing financial reports and projections