Tool

Margin & Markup Calculator

Margin and markup are not the same number. See both from your cost and price — and the price you need for any target margin.

Unit cost

Selling price

Results

Gross profit per unit: $40.00
Gross margin: 40.0%
Markup: 66.7%
Price for 50% margin: $120.00

Margin is profit ÷ price. Markup is profit ÷ cost. They are not the same — a 50% markup is only a 33% margin.

A worked example — your numbers

You buy each unit for $60.00 and sell it for $100.00.

Gross profit = $100.00 − $60.00 = $40.00 per unit.

Gross margin = $40.00 ÷ $100.00 = 40.0%. Markup = $40.00 ÷ $60.00 = 66.7%.

To earn a 50% margin on this cost, you'd price at $120.00.

How to read your result

Each sale keeps $40.00 (40.0% of the price) to cover fixed costs and profit. Notice your markup (66.7%) is a bigger number than your margin (40.0%) for the exact same dollar of profit — that gap is why pricing off markup quietly under-prices you.

If you simply "added 66.7%" to cost you'd land exactly here; but if you intended 40.0% as a margin and added it to cost instead, you'd undershoot. Price to the margin you actually want — $120.00 gets you to 50%.

This calculator provides directional estimates for informational purposes only and is not tax, legal, or financial advice. Results depend on the inputs you provide. For advice specific to your situation, book a Discovery Meet.

What this calculator does

This tool turns your unit cost and selling price into the three numbers that actually drive pricing decisions: your gross profit per unit, your gross margin percentage, and your markup percentage. It also works backward — telling you the price you would need to charge to hit a target margin. It is built for owners who set prices and want to know, in plain terms, how much of each sale they actually keep.

Margin vs. markup — the difference that trips people up

These two percentages describe the same dollar of profit but measure it against different bases, so they are never equal:

·Gross margin = profit ÷ selling price. It answers "of every dollar a customer pays me, how much do I keep?"
·Markup = profit ÷ cost. It answers "how much did I add on top of what the item cost me?"

Because cost is always smaller than price, the markup percentage is always larger than the margin percentage for the same sale. Confusing the two is one of the most common — and most expensive — pricing mistakes a growing business makes.

Common mistakes

·Pricing off markup but reporting in margin. "I add 30%" feels like a 30% margin but is really about 23%.
·Leaving out true cost. Margin is only honest if your cost includes freight, payment-processing fees, returns, and shrinkage — not just the wholesale price.
·Blending margins across products. A healthy average can hide individual products that lose money on every sale.

Frequently asked questions

Is margin the same as markup?+

No. Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. The same dollar of profit always produces a larger markup percentage than margin percentage. For example, buy at $60 and sell at $100: that is a 40% margin but a 66.7% markup.

How do I convert markup to margin?+

Margin = markup ÷ (1 + markup). A 50% markup equals a 33.3% margin; a 100% markup equals a 50% margin. The calculator does this for you when you enter cost and price.

What is a good gross margin?+

It varies widely by industry — services and software often run 60–90%, retail and distribution frequently 20–40%, and food or hardware can be lower. Compare against your own industry rather than a universal target. The useful habit is to track margin consistently and watch the trend.

Why does pricing off markup hurt my margin?+

Because markup is calculated on cost, a markup percentage always understates the discount it takes from your margin. Owners who "add 30%" to cost are often surprised their actual margin is only about 23%. Pricing to a target margin avoids that gap.

Want a real answer, not just a calculator?

A calculator gives you a directional number. A free Discovery Meet gives you a CPA who reviews your actual books, structure, and goals.

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