What the markup / margin calculator does
Markup and margin both describe the profit on a sale, but against different bases — and confusing them is one of the most common and costly pricing mistakes in small business. This calculator works in both directions: enter a cost and a markup percentage to get the selling price, margin and profit, or enter a cost and a selling price to get the markup and margin. It runs in your browser.
Markup vs margin
Markup % = Profit ÷ Cost × 100 (profit relative to what you paid)
Margin % = Profit ÷ Price × 100 (profit relative to what you charge)
Cost $40, price $60, profit $20:
Markup = 20 ÷ 40 = 50%
Margin = 20 ÷ 60 = 33.3%Same sale, two different percentages. Markup is always the larger number, because cost is smaller than price. A supplier talking about “50%” and a retailer talking about “50%” may mean quite different things.
Conversion table
| Markup | Margin | Price on $100 cost |
|---|---|---|
| 10% | 9.1% | $110 |
| 25% | 20% | $125 |
| 33.3% | 25% | $133 |
| 50% | 33.3% | $150 |
| 66.7% | 40% | $167 |
| 100% | 50% | $200 |
| 150% | 60% | $250 |
| 300% | 75% | $400 |
Margin = Markup ÷ (1 + Markup) Markup = Margin ÷ (1 − Margin)
50% markup → 0.5 ÷ 1.5 = 33.3% margin | 50% margin → 0.5 ÷ 0.5 = 100% markupThe classic mistake
A shop owner wants a 40% margin and marks everything up by 40%. Cost $10 becomes $14; profit $4; margin is 4 ÷ 14 = 28.6%, not 40%. To get a 40% margin, the markup must be 66.7%: price = cost ÷ (1 − 0.40) = $16.67. Over a year of sales that error is the difference between a viable business and one that cannot cover its overheads. The calculator's “from cost + markup” mode shows the resulting margin immediately, so you can see the gap.
Pricing from a target margin
Price = Cost ÷ (1 − target margin)
Cost $32, target margin 45%: 32 ÷ 0.55 = $58.18
Cost $7.50, target margin 70%: 7.50 ÷ 0.30 = $25.00Retailers usually think in margin because it relates directly to revenue and to the gross profit line on the accounts. Manufacturers and contractors often quote markup because it is applied to a cost estimate. Know which your industry uses and translate when talking across the boundary.
Typical margins by sector
| Sector | Typical gross margin |
|---|---|
| Grocery | 20–30% |
| Clothing retail | 40–60% (keystone = 100% markup = 50% margin) |
| Restaurants (food cost) | 60–70% (food cost 30–40% of price) |
| Electronics retail | 10–25% |
| Jewellery | 40–70% |
| Software / SaaS | 70–90% |
| Construction contracting | 15–30% markup on costs |
| Consulting | 50–70% |
Gross margin has to cover rent, wages, marketing and everything else before any net profit remains — which is why a 20% margin business needs high volume.