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Margin Calculator
Calculate profit margin and markup from your cost and selling price.
Margin is the share of the selling price that is profit. It is the number retailers, wholesalers and service firms price by, and the one most often confused with mark-up. This calculator works both ways: margin from a cost and price, or the price required for the margin you want.
How to use this calculator
- To find a margin: enter the cost and the selling price.
- To set a price: enter the cost and the target margin percentage.
- Press calculate to see the profit, the margin and the price.
Margin is not mark-up
Mark-up is added on top of cost; margin is measured out of the final price. A 50% mark-up is only a 33% margin, so pricing by the wrong one quietly underprices everything. If a target margin matters, always convert through the price, as this calculator does.
Frequently asked questions
What is the margin formula?
Margin = (price − cost) divided by price, times 100. And price from a target margin = cost divided by (1 − margin/100).
What margin should I aim for?
It depends on your costs beyond the product itself: the margin must cover rent, staff, marketing and tax and still leave profit. Many retailers target 40 to 55% gross margins for that reason.
How do discounts affect margin?
Directly and hard. A 20% discount on a product with a 40% margin cuts the margin to 25%, so volume must rise sharply to make up the difference.