Markup vs Margin.

Enter your cost and selling price. The calculator instantly shows markup, margin, multiplier, and gross profit. They're not the same number, and the difference matters.

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Markup vs. Margin

Know your real profit margin.

Unit cost

Currency

Markup

Added to your cost

Margin

% of selling price

Selling price

$125.00

$100.00 cost · 25% markup · 20% margin

Your cost

$100.00

Gross profit

$25.00

True margin

20%

Multiplier

1.25×

How does your margin compare?

—

A 25% markup on $100.00 gives you $125.00. A true margin of 20%.

Helpful tips

🎯

Margin is what you actually keep

Markup tells you how much you added to cost. Margin tells you what percentage of the sale you pocket. Always set profit targets in margin. It's the number that reflects real business health.

📦

Include all costs before you calculate

Your unit cost should cover everything: materials, packaging, shipping, platform fees, and a share of overheads. Pricing from an incomplete cost figure locks in a margin that doesn't exist in practice.

💸

Discounts hit margin harder than you think

A 10% discount on a product with a 20% margin wipes out half your profit. Use the discount section to see exactly what a sale does to your numbers before you announce it.

🏭

Benchmarks vary wildly by industry

A 20% margin is strong in retail but thin in SaaS. Use the industry comparison panel to see how your margin stacks up in your specific sector. Not against some universal average.

How the calculator works

Same profit, two different numbers.
Only one tells the full story.

Markup and margin both describe the gap between cost and price. But they measure it from different directions, and that makes all the difference when you're setting prices, comparing industries, or reporting to anyone else.

Markup is calculated from cost. A 25% markup on a $100 item adds $25 and produces a $125 selling price. Margin is calculated from the selling price. That same $25 profit divided by $125 is a 20% margin. Not 25%. They are never equal unless both are zero.

Why it matters: most industries talk in margin. Retailers target a 40% margin. Agencies price for a 60% margin. If you set prices using markup but report in margin, you'll consistently undershoot. The calculator converts instantly between both so you always know which number you're actually looking at.

The optional overhead and discount panels exist for the same reason: the gross margin is the starting point, not the result. Fees, packaging, platform cuts, and any discounts you offer all carve into that number. The calculator makes each cut visible before it happens.

Markup (price − cost) ÷ cost × 100

Margin (price − cost) ÷ price × 100

Sell price cost × (1 + markup%)

Multiplier price ÷ cost

Common questions

Both measure the gap between cost and price, but they use a different denominator. Markup divides profit by cost. It tells you how much you added. Margin divides profit by selling price. It tells you what percentage of revenue you keep.

A $25 profit on a $100 cost is a 25% markup. That same $25 profit on a $125 selling price is a 20% margin. Same transaction, two different percentages. Neither is wrong, but mixing them up when setting targets is one of the most common pricing mistakes in small business.

Because selling price is always higher than cost, so dividing by the selling price always gives a smaller number. Margin is calculated as profit ÷ selling price, and since selling price > cost, the result is always lower than the same profit ÷ cost (markup).

The two numbers are only equal at zero. At every other point, markup will always be the bigger percentage. This is why using markup figures to hit margin targets will always leave you short.

The formula is: Margin = Markup ÷ (1 + Markup). For a 25% markup: 0.25 ÷ 1.25 = 0.20, or 20% margin.

Going the other way, margin to markup. Use: Markup = Margin ÷ (1 − Margin). For a 20% margin: 0.20 ÷ 0.80 = 0.25, or 25% markup.

The calculator handles this conversion instantly as you type, so you don't need to do it manually. But knowing the formula helps you spot when someone else is mixing up the two.

Everything that disappears when you make one more sale. That means raw materials, packaging, inbound shipping, platform fees (Etsy, Shopify, Stripe, etc.), and any returns allowance you factor in.

Overheads such as studio rent, software subscriptions, and your own time are trickier. They don't change per unit, but they do need to be recovered. Use the Add overhead costs panel to layer in a flat or percentage overhead and see how it affects your net margin separately from your gross margin.

It shows the after-discount margin. What you're left with once you apply a percentage discount to the selling price. Discounts compress margin faster than most people expect.

If your margin is 20% and you offer a 10% discount, you don't lose 10 percentage points. You lose half your profit. The panel makes the actual impact visible so you can decide whether a promotion is worth running before you commit to it publicly.

Select the industry that best matches your business from the dropdown and the calculator will show how your current margin compares against a typical range for that sector.

Use it as orientation, not a target. Industry averages vary significantly by geography, business model, and scale. A SaaS product with high development costs and low distribution costs behaves very differently from a physical retail product in the same "software" category. The benchmark is a useful sanity check — but your own unit economics should always drive the decision.

Yes, use the Share button to generate a short link that opens the calculator with your exact inputs pre-filled. Links expire after 90 days and require no account to generate or open.

The Copy summary button copies a plain-text breakdown of your results. Useful for pasting into a quote, proposal, or spreadsheet. There's no login required and nothing is stored server-side; the calculation lives entirely in the URL.