Profit Margin Calculator: Margin vs Markup

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Quick answer

Enter a cost and a selling price, and the tool returns the profit, the margin and the markup. Margin and markup are not the same. Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. A cost of 800 sold at 1,000 is a 20% margin but a 25% markup. Your browser does the maths, so the figures stay on your device.

What the Profit Margin Calculator does

Give the tool what an item costs you and what you sell it for. It shows the profit in money plus the two percentages people most often mix up, the margin and the markup, next to each other.

Use it to price a product or to convert one percentage into the other. Aiming for a margin but applying a markup is a common mistake, and it costs money on every sale.

How it works

The tool subtracts the cost from the selling price to get the profit. It then expresses that profit two ways: as a margin, by dividing it by the selling price, and as a markup, by dividing it by the cost. Both appear as percentages.

The two differ only in what you divide by. Margin divides by the larger number (the price), so it is always the smaller percentage. Markup divides by the smaller number (the cost), so it is always larger. One profit, two percentages.

Methodology

Find the profit. Subtract the cost from the selling price.
Calculate the margin. Divide the profit by the selling price and multiply by 100.
Calculate the markup. Divide the profit by the cost and multiply by 100.
Show all three. Display the profit, the margin and the markup together.

Profit, margin and markup

profit = selling price − cost
margin% = profit ÷ selling price × 100
markup% = profit ÷ cost × 100

Worked example
cost 800, selling price 1,000 → profit 200 · margin 20% · markup 25%

Margin is on the selling price and markup is on the cost, so markup is always the larger number: a 50% markup is only a 33% margin. Confusing the two underprices your product.

Assumptions

The cost you enter is the full cost of the item, usually the cost of goods. Overheads, operating costs and taxes that aren't in that figure are left out of this calculation.
The selling price is taken before sales tax. Tax you collect on top is not your profit.
Profit is simply price minus cost (gross profit per unit). Volume, fixed costs and discounts are not taken into account.

Standards and references

Profit margin: Profit as a percentage of the selling price: profit divided by price. The price is the larger figure, so margin is always the smaller of the two percentages and can never exceed 100%.
Markup: Profit as a percentage of the cost: profit divided by cost. The cost is smaller, so markup is always larger than margin, and it can go above 100%.
Why they are confused: Both describe the same profit, so they sound interchangeable, but they are measured against different bases. A 50% markup equals a 33% margin. If you target a margin but apply a markup, you underprice.

Accuracy and limits

Profit, margin and markup are calculated exactly from the cost and price you enter, so the figures are precise for a single item.

The calculator shows both margin and markup on purpose. Margin is on the selling price and markup is on the cost, so for the same profit the markup is always the larger number. That gap catches people out when they set prices.

It calculates gross profit per unit. Overheads, operating expenses, fixed costs and sales volume are not included, so treat the result as a pricing figure, not a full profit-and-loss result.

It assumes the price is before tax. Sales tax collected from the customer is not profit; if you include it in the selling price, the margin and markup will be overstated.

Real-world uses

Pricing a product

Try selling prices until the margin or markup matches the one you want.

Translating margin and markup

See what a supplier's suggested markup works out to as a margin, or the other way round.

Checking profitability

Check the profit and both percentages on a sale you have already made.

Avoiding underpricing

Make sure the percentage you are aiming for is the same one you are applying.

When it fits, and when it doesn't

Good for

Pricing an item from cost and price
Seeing margin and markup together
Translating between the two percentages
Checking per-unit profit

Not the best choice for

Net profit after overheads and tax
Volume or break-even analysis
Multiple products or a full P&L
Including sales tax in the price

For net profit, account for overheads, operating costs and tax separately. To find how many units you must sell to cover fixed costs, use a break-even calculator. This tool covers per-unit gross profit, margin and markup.

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. The same profit gives two different percentages because the base differs, and markup is always the larger of the two.

Why is a 50% markup only a 33% margin?

Markup divides the profit by the cost, while margin divides it by the higher selling price. If the cost is 100 and the markup is 50%, the price is 150 and the profit is 50. Divide 50 by 150 and you get a 33% margin.

Which should I use to price a product?

Either works if you stay consistent. Decide on a target margin or markup and use the matching formula. Problems start when you aim for a margin but calculate a markup, which underprices the item.

How is profit calculated here?

Profit is the selling price minus the cost, the gross profit on one item. Both the margin and the markup percentages come from that profit.

Can margin be more than 100%?

No. Margin is profit over the selling price, and profit cannot be larger than the price, so margin stays just under 100%. Markup is measured against the cost and can go above 100%.

Does this include overheads or tax?

No. It calculates gross profit per unit from the cost and price you enter. Overheads, operating costs and taxes are left out, so the result is a pricing figure, not net profit.

What cost should I enter?

The full cost of the item, usually the cost of goods: what you pay to make or buy it. Leave out general overheads, which you handle separately from per-unit pricing.

Should the selling price include tax?

No. Enter the price before sales tax, because tax collected from the customer is not your profit. Including it would overstate the margin and markup.

How do I convert a markup to a margin?

Divide the markup by one plus the markup. A 50% markup is 0.5 divided by 1.5, which is 33%. The tool shows both from the same cost and price, so you can read the conversion off the result.

What is a good margin?

It varies widely by industry. Groceries run on thin margins and software on high ones. There is no universal figure, so compare against typical margins in your own sector.

Is my data uploaded?

No. Your browser runs the calculation and sends nothing to a server, so your costs and prices stay on your device.

Can I work backward from a target margin to a price?

Yes: adjust the selling price until the margin shown matches your target. Or calculate it directly: the price for a target margin is the cost divided by one minus the margin as a decimal.

References

The calculator works out profit, margin (profit over selling price) and markup (profit over cost) from the same two inputs. It shows both percentages because mixing them up leads to underpriced products.

GST Calculator

Add or remove GST at the 2026 rates, for one item or a full bill with mixed rates, with the CGST, SGST, UTGST or IGST split and a rate-wise invoice summary.