Free tool · Instant
Profit margin calculator
Margin and markup are not the same percentage. A 50% markup is a 33.33% margin. Each question is written as a sentence, and the answer shows both figures with the sum underneath.
- Margin and markup side by side
- Shows the working
- Nothing is uploaded
How it works
Three sums, and only three. Profit is the selling price minus the cost. Margin is that profit divided by the price. Markup is the same profit divided by the cost.
- Profit = price − cost
- Margin % = profit ÷ price × 100
- Markup % = profit ÷ cost × 100
On a cost of $40 and a price of $60, profit is $20. Margin is 20 ÷ 60 =33.33%. Markup is 20 ÷ 40 = 50%. Quoting the markup as if it were the margin overstates how much of the price you keep.
From a target margin back to a price
Price = cost ÷ (1 − margin). A 33.33% margin on a $40 cost is 40 ÷ 0.6667 =$60. A margin of 100% or more is impossible: the whole price would have to be profit, which leaves nothing for the cost.
From a markup to a price
Price = cost × (1 + markup). A 50% markup on $40 is 40 × 1.5 = $60, and the margin that equals is still 33.33%.
The most you can pay
Cost = price × (1 − margin). Selling at $60 with a 33.33% margin, the most the product can cost is $40. Same arithmetic, read backwards.
Questions
What is the difference between margin and markup?
Margin is profit divided by the selling price. Markup is profit divided by the cost. A 50% markup on a $40 cost makes a $60 price, and the margin on that price is 33.33%, not 50%.
Why is a 50% markup only a 33.33% margin?
The profit is $20 either way. $20 is half of the $40 cost, which is a 50% markup, and a third of the $60 price, which is a 33.33% margin.
Can margin be 100%?
Only if the cost is zero, which means you are not buying anything to sell. A target margin of 100% or more has no selling price, so the calculator stops and says so.
Does this use a particular currency?
No. Pick the symbol. The arithmetic is the same in dollars, pounds, euros or rupees, and nothing you type is uploaded.
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