What is the difference between margin and markup?

Margin is profit divided by selling price; markup is profit divided by cost. Cost 60 and price 100 gives a 40% margin but a 66.7% markup.

How do I price for a target margin?

Price = Cost ÷ (1 − desired margin). For cost 60 and 40% margin: 60 ÷ 0.6 = 100.

Profit Margin Calculator

Work out margin, markup and profit from cost and price — or find the selling price you need for a target margin.

1 — From cost & selling price

Cost Selling price

—Profit

—Margin

—Markup

2 — Price for a target margin

Cost Desired margin (%)

—Required Price

—Profit per Unit

Margin vs Markup — Don’t Mix Them Up

They use the same numbers but different bases, and confusing them silently destroys profitability:

Margin = Profit ÷ Selling price. Cost 60, price 100 → profit 40 → margin 40%.
Markup = Profit ÷ Cost. Same numbers → markup 66.7%.
A “50% markup” is only a 33.3% margin. If your accountant asks for margin and you give markup, your prices are too low.

To price for a target margin, the formula is Price = Cost ÷ (1 − margin) — not Cost × (1 + margin). Calculator 2 uses the correct formula.

Frequently Asked Questions

What is a good profit margin?

It varies hugely by industry: groceries run 1–3% net, restaurants 3–9%, retail 5–10%, software 70%+ gross. Compare against your industry, not a universal number.

Gross vs net margin?

This calculator gives gross margin (price minus direct cost). Net margin also subtracts rent, salaries, marketing and taxes.

Why can’t margin be 100%?

A 100% margin would mean zero cost. As your target margin approaches 100%, the required price approaches infinity — that’s why the formula divides by (1 − margin).