Margin & markup

Profit margin, markup, and the price you should charge.

Currency

Cost

Selling price

Gross margin

40.00%

Profit of $40.00 per unit

How it works

Margin and markup are not the same number, and confusing them is how businesses accidentally price below cost. This shows both from the same inputs.

Margin % = (Price − Cost) ÷ Price × 100 Markup % = (Price − Cost) ÷ Cost × 100

Example: Cost 60, price 100: a 40% margin but a 66.7% markup.

What is the difference between margin and markup?

Margin measures profit against the selling price; markup measures the same profit against the cost. Markup is always the larger number.

How do I price for a target margin?

Divide the cost by (1 − margin ÷ 100). For a 40% margin on a cost of 60: 60 ÷ 0.6 = 100.

Can margin be over 100%?

No. Margin approaches 100% as cost approaches zero but can never reach or pass it. Markup has no upper limit.