Quick answer
Profit = price − cost; margin = profit ÷ price × 100; markup = profit ÷ cost × 100. Buying at 80 and selling at 100 gives a profit of 20, a 20% margin and a 25% markup. For a 20% margin, price = cost ÷ (1 − 20%) = 100.
Profit, margin and markup: what's the difference?
Three everyday pricing calculations on one page: profit, margin and markup from cost and price; the price you need to charge for a target margin or markup; and the final price after one or two stacked discounts. Each result shows the formula with your numbers, which makes the margin-versus-markup difference obvious.
How to use it
- 1
“How much profit”: enter cost and selling price to get profit (or loss), margin and markup.
- 2
“What price”: enter the cost, choose whether your target is a margin (% of price) or a markup (% of cost), then the percentage.
- 3
“Price after discount”: enter the list price and the discount, plus an extra discount if a coupon stacks on top.
- 4
Check the formula line and copy the result into your price list or message.
Margin to markup
For the same profit, markup (on cost) is always higher than margin (on price).
| Margin | Markup | Cost 100 sells at |
|---|---|---|
| 10% | 11.11% | 111.11 |
| 20% | 25% | 125 |
| 25% | 33.33% | 133.33 |
| 30% | 42.86% | 142.86 |
| 40% | 66.67% | 166.67 |
| 50% | 100% | 200 |
Formulas
| To find | Formula | Example |
|---|---|---|
| Profit | Price − cost | 100 − 80 = 20 |
| Margin | Profit ÷ price × 100 | 20 ÷ 100 = 20% |
| Markup | Profit ÷ cost × 100 | 20 ÷ 80 = 25% |
| Price for a margin | Cost ÷ (1 − margin) | 80 ÷ 0.8 = 100 |
| Price for a markup | Cost × (1 + markup) | 80 × 1.25 = 100 |
Examples
Online shop targeting 30% margin
A shirt costs 14 to source. For a 30% margin, charge 14 ÷ 0.7 = 20. Adding 30% to cost (18.20) would only give about a 23% margin.
Checking one order
Cost 45, price 59: profit 14, margin 23.73%, markup 31.11%. Add platform fees and shipping to the cost first to see the real profit.
Stacked discounts
20% off then a 10% coupon on 100: you pay 72, a 28% total discount, not 30%.
Common problems
- Adding 30% to cost to get a 30% margin.
- That is a 30% markup, which is only a 23.08% margin. Pick “% of price (margin)” to divide by (1 − 30%).
- Adding discounts together.
- The second discount applies to the reduced price, so 20% then 10% is 28% in total.
- Error at 100% margin.
- A 100% margin would need a zero cost. Use a lower margin or switch to markup.
Margin or markup?
Margin tells you how much of each unit of revenue is profit, so it suits reports and revenue-based targets. Markup tells you how much you add on top of cost, which is handy for quick pricing and wholesale. Agree on one meaning within your team: “30% profit” as markup and as margin produce different prices.
Gross versus net margin
This tool works per product, close to gross margin. Net margin also deducts fixed costs such as rent, wages, advertising and tax, so product margins need to sit well above the net profit you are aiming for.
Glossary
- Cost
- Everything it takes to have one unit ready to sell: purchase price, shipping, fees, packaging.
- Margin
- Profit as a share of the selling price.
- Markup
- Profit as a share of cost: how much you add on top of cost.
- Stacked discount
- Several discounts applied one after another, each on the already reduced price.
Frequently asked questions
Is a 20% margin the same as a 20% markup?
No. On a cost of 80, a 20% margin means a price of 100, a 20% markup means 96.
How do I price for an X% margin?
Price = cost ÷ (1 − X%). For a markup, price = cost × (1 + X%).
What if I sell at a loss?
Profit turns into a red “Loss” line and margin and markup become negative.
Does it include VAT?
No. If your price includes VAT, remove it first with the VAT calculator and work with the net price.
Is anything stored?
No. Everything is calculated in your browser.
Ratings and comments
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