Find margin and markup from cost and price, or set a selling price from a target margin or markup.
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Enter the values to see the result here.
Formula
With cost C and selling price P:
profit=P−C,margin=PP−C×100,markup=CP−C×100
To set a price from a target margin m or markup k (both as fractions):
P=1−mCorP=C(1+k)
The two are linked by k=1−mm and m=1+kk.
Worked example
A shop buys a lamp for 60 and wants a 40% margin.
P=60/(1−0.40)=100.
Profit: 100−60=40.
Markup: 40/60=66.7%.
If the owner had instead applied a 40% markup, the price would be 60×1.4=84 and the margin only 28.6%. Mixing the two is the commonest pricing error.
Common mistakes
Adding the margin percentage to cost (cost × 1.40) and calling it a 40% margin.
Comparing a supplier’s markup to your own margin target without converting.
Forgetting discounts: a 10% discount on a 30%-margin item reduces margin to about 22%.
Ignoring the sale price excluding VAT. Use the net price, not the shelf price with tax.
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 cost. The same sale has a higher markup than margin. Cost 60, price 100: margin 40%, markup 66.7%.
Why can't the target margin be 100%?
A 100% margin would need a cost of zero, or an infinite price. The price formula divides by 1 minus the margin, which breaks down at 100%.
Which one should I use to price products?
Many retailers think in margin because it ties directly to revenue and to reports. Many wholesalers and tradespeople think in markup because it is applied to cost. Pick one and use it consistently; the tool shows both.
Is this gross or net profit?
Gross, based only on the cost you enter. Rent, wages, shipping and tax come off afterwards. Add them to the cost if you want a fully loaded figure.