How to use the calculator
- Cost + price → margin: enter what an item costs you and what you sell it for to see profit, margin and markup.
- Cost + margin → price: enter your cost and the margin you want, and get the price you need to charge.
- Cost + markup → price: the same, using a markup percentage instead.
Margin vs. markup — the difference
Both describe profit as a percentage, but they divide by different numbers:
Gross margin = (Price − Cost) ÷ Price × 100
Markup = (Price − Cost) ÷ Cost × 100
An item that costs 400 and sells for 650 makes 250 profit. That is a 38.5% margin (250 ÷ 650) but a 62.5% markup (250 ÷ 400). Confusing the two is one of the most common pricing mistakes: adding a 30% markup does not give you a 30% margin.
Margin and markup conversion
| Markup | Equals margin |
|---|---|
| 25% | 20.0% |
| 33.3% | 25.0% |
| 50% | 33.3% |
| 66.7% | 40.0% |
| 100% | 50.0% |
| 150% | 60.0% |
| 200% | 66.7% |
Margin = Markup ÷ (1 + Markup) Markup = Margin ÷ (1 − Margin)
Pricing for a target margin
To reach a specific margin, divide the cost by (1 − margin):
Price = Cost ÷ (1 − Target margin)
For a 35% margin on an item costing 400: 400 ÷ 0.65 = 615.38. Note that the maximum possible margin is just under 100%, whereas markup has no upper limit.
Gross vs. net margin
This calculator works out gross margin — price minus the direct cost of the product. Net margin also subtracts operating costs such as rent, salaries, marketing, marketplace fees and taxes. For online sellers, include marketplace fees in “cost” or use our Amazon FBA, eBay or Etsy calculators for a net figure.
Typical gross margins
Margins vary hugely by industry: grocery retail often runs on gross margins of 20–30%, clothing retail 40–60%, and software or digital products can exceed 80%. Compare yourself with businesses in the same sector rather than a universal target.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. A 50% markup equals a 33.3% margin.
How do I calculate selling price from margin?
Divide the cost by (1 − margin). For a 40% margin on a cost of 60: 60 ÷ 0.6 = 100.
Can margin be over 100%?
No. Margin can approach but never reach 100%, because profit can never exceed the price. Markup can be over 100%.
Is this gross or net margin?
Gross margin. To get net margin, include all other costs — fees, overheads and taxes — in the cost figure.