Argo Books

Markup vs Margin Calculator

Enter what you know and get the rest. Markup and margin are different numbers from the same sale, and mixing them up costs money on every transaction.

$

What the item costs you: materials, wholesale price, or direct production cost.

%
Selling price $0.00 Enter a cost to begin
Cost
$0.00
Price
$0.00
Profit per unit
$0.00
The two percentages
Markup on cost
0%
Margin on price
0%

Markup and margin are not the same number

They describe the same sale from two different angles, and the difference is money.

Markup = profit ÷ cost    Margin = profit ÷ price

Buy something for $50, sell it for $100. Your profit is $50. Against your cost that is a 100% markup. Against your price it is a 50% margin. Same transaction, same $50, two very different-looking percentages.

Markup is always the bigger number, and the gap grows as you go up. That is why the confusion is so costly: someone aiming for a 40% margin who adds 40% to their cost lands on a 28.6% margin instead, and gives away nearly a third of the profit they thought they were making.

Conversion table

The same relationship in both directions. Find your target margin on the left and the markup you actually have to apply is on the right.

If you want this marginApply this markupSell $100 of cost at
10% 11.1% $111.11
20% 25% $125.00
25% 33.3% $133.33
30% 42.9% $142.86
40% 66.7% $166.67
50% 100% $200.00
60% 150% $250.00
66.67% 200% $300.03
75% 300% $400.00

Notice how quickly markup runs away at the top. A 75% margin needs a 300% markup, which is why very high margins are rare outside software and services.

Which one should you use?

  • Markup for setting prices. You start from a known cost and add to it, so markup is the calculation you actually perform.
  • Margin for judging the business. It tells you what share of every dollar of revenue you keep, and it compares fairly across products whose costs are wildly different.

Trouble arrives when advice given in one is applied in the other. "Aim for 50%" is meaningless without saying which. If you take one thing from this page, take the habit of asking.

This is gross margin, not profit

Everything here is price minus the direct cost of the thing you sold. Rent, insurance, software, equipment, and your own wages all come out of what is left.

A business can run a healthy 60% gross margin and still lose money, if the overheads are bigger than the gross profit. Gross margin is a pricing instrument. Whether the business works is a separate question, and it needs the whole year's figures rather than one product.

Where a calculator stops helping

This works out one product at an assumed cost. It cannot tell you what your costs really were, which products actually carry the margin you think, or what is left after overheads.

Argo Books tracks your real costs and sales so the margin you see is measured rather than assumed. It runs on your own computer and it is free to start.

Frequently asked questions

Markup is measured against your cost; margin is measured against your selling price. Buy for $50 and sell for $100 and you have a 100% markup but a 50% margin, from exactly the same transaction. The confusion is expensive: someone told to hit a 40% margin who adds 40% to cost actually achieves a 28.6% margin and quietly loses a chunk of every sale.

Divide the margin by one minus the margin. A 50% margin is 0.5 / 0.5 = 100% markup. A 60% margin is 0.6 / 0.4 = 150% markup. Markup is always the larger number, and the gap widens as margins rise.

Divide the markup by one plus the markup. A 100% markup is 1 / 2 = 50% margin. A 25% markup is 0.25 / 1.25 = 20% margin. Margin can never reach 100%, no matter how large the markup gets.

Use markup when setting a price from a known cost, because it is the calculation you perform. Use margin when judging profitability, because it tells you what share of your revenue you keep and is comparable across products with different costs. Most businesses need both, which is why mixing them up is so common.

Because margin is profit as a share of the price, and profit can never exceed the price unless your cost is zero. As markup rises, margin approaches 100% but never gets there: a 400% markup is an 80% margin, a 900% markup is 90%. Anyone quoting a margin above 100% has confused the two terms.

Doubling the wholesale cost to set the retail price, a long-standing retail convention. That is a 100% markup and a 50% margin. It exists because the retail margin has to cover rent, staff, shrinkage, and unsold stock, not because doubling is inherently fair.

It depends entirely on the trade. Grocery retail survives on single digits because of volume; handmade goods and consultancy commonly run at 50% to 70% because volume is low and the labour is yours. The useful comparison is against others in your own field, and against your own figure last year.

No. This is gross margin: price minus the direct cost of the thing you sold. Rent, insurance, software, and your own wages come out of that. A healthy gross margin can still leave a business losing money overall, which is why gross margin is a pricing tool rather than a verdict on the business.