Profit margin calculator
Enter what an item cost and what it sells for to see the profit, the margin and the markup. A second tool finds the selling price for the margin or the markup that you want.
Margin and markup of a sale
This answer is for the example values in the boxes above. a cost of $60.00 and a selling price of $100.00. Change the boxes to see your own answer.
Price for a margin or a markup
How it works
The profit is the selling price less the cost. The margin is that profit as a percent of the selling price, and the markup is the same profit as a percent of the cost. The first tool takes a cost and a price and gives the profit with both percentages.
The second tool works the other way. Choose a margin or a markup, enter the percent and the cost, and it gives the selling price, with the profit and both percentages.
A worked example
An item costs $60 and sells for $100. That is a profit of $40.00, a margin of 40 percent and a markup of 66.67 percent.
To get a margin of 25 percent on a cost of $60, the price is $60 divided by 0.75, which is $80.00. The profit is $20.00 and the markup is 33.33 percent. To get a markup of 50 percent on the same cost, the price is $60 times 1.5, which is $90.00, with a profit of $30.00 and a margin of 33.33 percent.
Why the two percentages differ
The profit is the same in both, so the percentages differ only in what they divide by. When a sale makes money the price is above the cost, so the margin is the smaller of the two. A 50 percent markup is a 33.33 percent margin, and a 50 percent margin is a 100 percent markup.
Rounding to the cent
The price is rounded to the cent, so the margin and the markup that the second tool shows are those of the rounded price. A cost of $61.37 and a margin of 33 percent need a price of $91.60, which has a margin of 33 percent to two decimals and a markup of 49.26 percent.
What it leaves out
The cost is whatever you put in it. With the cost of the goods alone the margin is a gross margin, and a net margin needs every other cost in it. The calculator knows nothing of tax, fees or discounts. A price below the cost gives a negative margin and a note that the sale loses money.
Questions
What is the difference between margin and markup?
Both are the profit as a percent, but of different things. The margin divides the profit by the selling price and the markup divides it by the cost. A cost of $60 and a price of $100 give a profit of $40, a margin of 40% and a markup of 66.67%.
How do I calculate profit margin?
Take the cost from the price and divide by the price. Multiply by 100 for a percent. A profit of $40 on a $100 price is 40 ÷ 100, which is 40%.
How do I calculate markup?
Take the cost from the price and divide by the cost. A profit of $40 on a cost of $60 is 40 ÷ 60, which is a markup of 66.67%.
How do I turn a markup into a margin?
Divide the markup by one plus the markup. A 50% markup is 0.5 ÷ 1.5, which is a 33.33% margin. To go the other way, divide the margin by one minus the margin: a 50% margin is a 100% markup.
How do I set a price for the margin that I want?
Divide the cost by one minus the margin. A cost of $60 and a margin of 25% give $60 ÷ 0.75, which is $80, with a profit of $20.
Can a margin be more than 100%?
No. The profit cannot be larger than the price, so a margin stays below 100%. A markup can be any size when the cost is small: an item that cost $1 and sells for $6 has a markup of 500%.
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