CalcKit
Margin Markup Calculator
Margin and markup both describe the profit on a sale, but they measure it against different things:
- Margin is the profit as a share of the selling price:
Margin = (Revenue - Cost) / Revenue * 100 - Markup is the profit as a share of the cost:
Markup = (Revenue - Cost) / Cost * 100
So the same sale always has a larger markup than margin. Enter any two of cost, margin, markup, revenue and profit, and the calculator finds the other three.
Example
An item costs $60 and sells for $100:
-
Profit:
100 - 60 = 40 -
Margin: the profit against the price.
40 / 100 * 100 = 40% -
Markup: the profit against the cost.
40 / 60 * 100 = 66.67%
Setting a price
From a markup: multiply the cost by 1 + markup / 100. A $60 cost with a 50% markup sells for 60 * 1.5 = 90.
From a margin: divide the cost by 1 - margin / 100. For a 50% margin on the same cost, the price is 60 / 0.5 = 120. Adding 50% to the cost gives only a 33.3% margin, a common pricing mistake.
Margin and markup compared
| Margin | Markup |
|---|---|
| 10% | 11.11% |
| 20% | 25% |
| 25% | 33.33% |
| 30% | 42.86% |
| 40% | 66.67% |
| 50% | 100% |
| 60% | 150% |
Markup = Margin / (100 - Margin) * 100, and back: Margin = Markup / (100 + Markup) * 100.
Frequently asked questions
Which is better to use, margin or markup?
Both describe the same profit. Markup is handy for setting prices from costs, and margin for reading profitability, since it shows how much of each sale is profit. What matters is not mixing them up: a 30% markup is only a 23.1% margin.
Can a margin be over 100%?
No. A margin is a share of the price, so it can only approach 100%, when the cost is close to zero. A markup can be any size: selling at three times the cost is a 200% markup and a 66.7% margin.