About this tool
Why it exists.
Margin and markup both describe profit, but they use different bases. Margin is profit divided by the selling price. Markup is profit divided by the cost. A product that costs 40 and sells for 60 has a 33.3% margin and a 50% markup. Mixing the two up can lead you to underprice by a wide margin.
Enter the cost and selling price to see profit per item, margin, markup and what share of the price is cost. In the second panel, enter the margin you want and the calculator tells you the price you must charge for it, using price = cost ÷ (1 − margin).
How to use it.
- Enter the cost per item and the selling price.
- Read the profit, margin and markup.
- Enter a target margin to see the price you need to charge.
Good 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 the cost. Margin can never reach 100%, but markup can be higher than 100%.
How do I price for a 40% margin?
Divide the cost by 0.6. A cost of 30 needs a price of 50 to earn a 40% margin.
Does the result include overheads and tax?
Only the costs you enter. Add shipping, fees, packaging and a share of overheads to the cost if you want a true figure.