What's the difference between margin and markup?

Margin is profit divided by selling price (profit ÷ price), while markup is profit divided by cost (profit ÷ cost). For example, if something costs $50 and sells for $100: profit is $50, margin is 50% ($50 ÷ $100), and markup is 100% ($50 ÷ $50).

How do I calculate selling price from a target margin?

Use the formula: Price = Cost ÷ (1 − Margin). For example, if your cost is $50 and you want a 40% margin: $50 ÷ (1 − 0.40) = $50 ÷ 0.60 = $83.33 selling price.

What profit margin percentage should I aim for?

Target margins vary by industry: retail often targets 30-50%, restaurants 60-70%, software can be 80%+, while manufacturing might target 20-40%. Consider your competition, market position, and business model when setting targets.

Can I use this calculator for service businesses?

Yes! For service businesses, treat your hourly rate as 'selling price' and your direct delivery costs (contractor fees, materials, time) as 'cost.' Calculate margins to ensure your service pricing supports profitability and business sustainability.

How do discounts affect my margin and markup?

Discounts reduce your selling price, which decreases both margin and markup percentages. Use this calculator to determine how deep discounts can go while maintaining minimum acceptable profitability levels.

Should I focus on margin or markup for pricing decisions?

Both are useful for different purposes. Margin is better for understanding actual profit retention and competitive positioning. Markup is easier for calculating selling prices from known costs. Use both metrics for comprehensive pricing analysis and business planning.

Margin & Markup Calculator

Determine selling price, gross margin, and markup percentage to ensure your product pricing meets profit goals. Includes profit breakdown and flexible input modes.

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Common Pricing Scenarios

Popular business pricing examples for quick calculation

Pricing Details & Calculation Method

Enter cost and choose calculation mode

Enter cost and selling price to calculate markup and margin percentages

Cost ($)

Selling Price ($)

Key Differences

Margin: Profit ÷ Selling Price (%)

Markup: Profit ÷ Cost (%)

Margin focuses on final price, markup on cost basis

How it works: Enter your known values and select calculation mode. The calculator determines selling price, profit, margin percentage, and markup percentage based on your inputs.

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