Margin vs Markup Calculator

These two metrics tell you different things about profitability. Margin is what you keep from revenue. Markup is how much you added to your cost. Use the toggle to switch modes and see both sides.

Results

$83.33
Selling Price
$33.33
Gross Profit
40.0%
Margin
66.7%
Markup

Margin vs. Markup — what's the difference?

Margin is profit ÷ selling price. Markup is profit ÷ cost. A 50% margin means you keep half the revenue. A 50% markup on a $50 cost means you sell at $75 — only a 33% margin.

Which should you use?

Retailers and service businesses often prefer markup because it's simpler to calculate mentally — "I mark everything up 30%" is easy to apply at the register.

Business analysts and investors prefer margin because it tells you what percentage of revenue you actually keep — more useful when comparing businesses of different sizes.

Margin = (Selling Price − Cost) ÷ Selling Price × 100
Markup = (Selling Price − Cost) ÷ Cost × 100
Selling Price = Cost ÷ (1 − Margin) = Cost × (1 + Markup)

How it works

Margin and markup are two ways of expressing the same relationship — the gap between your cost and your selling price — but they are not the same number. Using one when you mean the other is one of the most common pricing mistakes in retail and wholesale businesses.

Margin   = (Selling Price − Cost) ÷ Selling Price
Markup = (Selling Price − Cost) ÷ Cost

A 50% markup gives you a 33% margin. A 50% margin requires a 100% markup. This calculator solves for the selling price given either metric you prefer to work with.

Know your margin, not just your markup

Your margin is what matters for profitability because it tells you what fraction of each dollar of revenue you keep. A product with 10% markup might sound small — but if the margin is 9%, you keep 9 cents of every dollar. Track margin; use markup as a pricing shortcut.

Margin vs Markup Guide → More Tools →

For educational purposes. Business decisions should account for all costs, not just COGS.

Margin vs. Markup: Why the Difference Matters

These two pricing metrics are often confused, but they tell very different stories. Margin (gross profit margin) is profit divided by selling price — it answers “what percentage of revenue do I keep?” Markup is profit divided by cost — it answers “how much did I add to my cost?” Using one when you mean the other is one of the most common and costly pricing errors in retail, wholesale, and service businesses.

The Formulas

Margin   = (Selling Price − Cost) ÷ Selling Price × 100
Markup = (Selling Price − Cost) ÷ Cost × 100
Selling Price = Cost ÷ (1 − Margin)   or   Cost × (1 + Markup)

A Worked Example: 30% Margin = 42.9% Markup

Suppose your cost is $70 and you want a 30% margin:

So a 30% margin requires a 42.9% markup on cost — not 30%. Conversely, a 30% markup yields only a 23.1% margin ($30 profit on $100 selling price = 23.1%). This asymmetry trips up managers who assume the numbers are interchangeable.

Why Managers Confuse Them

Markup feels natural at the point of sale: “I bought this for $50 and marked it up 20%” is easy to do mentally. Margin feels abstract because it divides by the selling price — a number you do not know until you set the price. The result is that people who plan pricing using markup often end up with lower margins than they expected, eroding profitability without realizing why.

How Pricing Errors Eat Into Profitability

If you target a 25% margin but mistakenly use a 25% markup formula, here is what happens: a $80 cost gets marked to $100 (an $80 cost × 1.25 = $100 selling price). Your actual margin is only $20 ÷ $100 = 20%, not 25%. Over an entire product catalog, a 5-point margin shortfall can mean the difference between a profitable quarter and a loss.

When to Use Each Metric

Markup Use when setting prices at the counter or during purchasing decisions. If your cost is $40 and you apply a 30% markup, you know the selling price is $52 in seconds.
Margin Use when evaluating business performance, comparing product lines, or reporting to investors. Margin normalizes across different price points so you can ask: “What share of every dollar of revenue is actual profit?”

Key takeaway: set prices using the metric that matches how you think about profitability — and always double-check by reading the other metric back.