Profit Margin & Markup Calculator

What profit margin and markup actually mean

Every sale has two numbers that describe how profitable it is, and they're easy to mix up because they measure the same profit from two different starting points. Margin asks "what share of the selling price is profit?" — it's profit divided by price. Markup asks "how much did I add on top of what it cost me?" — it's profit divided by cost. Same sale, same dollar amount of profit, two different percentages.

This matters because the two numbers can look similar at low percentages and diverge sharply at high ones. A 10% margin and a 10% markup are close. A 50% margin, though, is the same as a 100% markup — you doubled your cost to set the price. Pricing a product with the wrong one of these two numbers in mind is a quiet, common way small businesses under-price their work.

How to use this calculator

Pick whichever tab matches the number you already know. If you know your cost and the price you're charging (or thinking of charging), use Cost + Price — you'll get the margin and markup as results. If you're working backward from a target margin or a target markup to figure out what price to charge, use the other two tabs instead. Add a quantity if you want to see total profit across a batch of units, not just per-unit profit.

Worked examples

Say something costs you $60 to produce or buy, and you sell it for $100. Profit is $40. Margin is $40 ÷ $100 = 40%. Markup is $40 ÷ $60 = 66.67%. Notice the gap — if someone told you "we run a 40% markup" when they meant a 40% margin, you'd be pricing everything too low.

Now say you want a 20% margin on something that costs $50. Price = $50 ÷ (1 − 0.20) = $62.50. If instead you wanted a straightforward 20% markup on that same $50 cost, price = $50 × 1.20 = $60. Same target percentage, two different prices — again, because margin and markup aren't the same scale.

Common mistakes

The single most common mistake is using "margin" and "markup" interchangeably when setting prices — they're close enough at small percentages that the error hides, then compounds as you scale toward higher-margin products. The second is forgetting that margin mathematically caps out below 100% (you can never make more profit than the entire selling price), while markup has no ceiling — a markup of 300% or more is completely normal for some industries. If your margin calculation is coming out at or above 100%, something's wrong with the inputs, not the math.

It's also worth remembering this calculator works from cost, meaning whatever you actually pay to produce or acquire the item — materials, direct labor, wholesale price, and so on. If you leave out real costs (packaging, payment processing fees, shipping you absorb), your "profit" here will look better than what actually lands in your bank account.