How to Calculate Profit Margin and Markup (and Why They're Different)

To calculate profit margin or markup, open the Margin Calculator, pick what you already know in the Know selector — Cost and price, Cost and margin %, or Cost and markup % — enter Cost and the second field, and read Margin, Markup, Selling price and Gross profit together.

What the Margin Calculator does

Margin and markup both measure profit on a sale, but they're percentages of two different numbers — margin is profit as a percent of the selling price, markup is profit as a percent of the cost — so the same sale produces two different-looking figures. The Margin Calculator takes whichever two numbers you have (cost and price, cost and a target margin, or cost and a target markup) and works out the rest: selling price, gross profit, margin, and markup, all at once.

How to calculate margin or markup with Toolbench

1. Open the Margin Calculator.
2. In the Know selector, choose Cost and price if you already have both numbers, Cost and margin % to solve for a price that hits a target margin, or Cost and markup % to solve for a price that hits a target markup.
3. Enter Cost.
4. Enter the second field — its label changes with your choice above: Selling price, Margin %, or Markup %.
5. Read the large highlighted result: it shows Gross margin when you entered cost and price, or Selling price when you worked backward from a margin or markup target.
6. Below it, Selling price, Gross profit, Margin, and Markup are all shown together, whichever mode you used — click any row to copy it.

Example: margin from cost and price

The tool opens with Know set to Cost and price, Cost 40, Selling price 100:

Cost	40
Selling price	100
Gross margin	60%
Selling price	100.00
Gross profit	60.00
Margin	60%
Markup	150%

A $60 profit on a $100 sale is a 60% margin (profit as a percent of the $100 price) — but a 150% markup (the same $60 as a percent of the $40 cost). Same sale, two very different-looking numbers.

Example: solving for price from a target margin

Switch Know to Cost and margin %, with Cost 50 and Margin % 20:

Cost	50
Margin %	20
Selling price	62.50
Selling price	62.50
Gross profit	12.50
Margin	20%
Markup	25%

To turn a $50 cost into a 20% margin, you need to charge 62.50 — a 25% markup on cost, not 20%. Switching Know to Cost and markup % with the same Cost 50 and Markup % 25 gives the identical result: Selling price 62.50, Margin 20%. A 25% markup and a 20% margin describe the exact same sale.

Reference: converting margin to markup

Because margin is profit over price and markup is profit over cost, the two scale together but never match except at 0%:

Margin	Markup
10%	11.11%
20%	25%
25%	33.33%
33.33%	50%
50%	100%

Markup is always the larger number once there's any profit at all — and the gap widens as the percentage grows. A 50% margin is a 100% markup, not 50%.

Tips and common mistakes

• Don't use "margin" and "markup" interchangeably when pricing. Pricing with a 30% "margin" when you meant a 30% markup on cost leaves less profit than you think — run both through the Know and markup % mode to see the real margin first.
• Margin can never reach 100% since it's profit over a price that includes that same profit; markup has no such ceiling, since it's profit over the smaller cost figure.
• Pick the "Know" mode that matches the number you're starting from — if a target margin or markup came from your accountant or a pricing policy, use the matching mode instead of guessing a price and checking.
• Gross profit is the same dollar amount in every mode — only margin and markup (the percentages) look different, because they're percentages of different bases.

Related tools

• Discount Calculator — find a sale price, stack two discounts, and add tax.
• Sales Tax Calculator — add tax to a price or back it out of a tax-included total.
• Percentage Calculator — percent of, percent change, increase and decrease.
• Loan Calculator — monthly payment, total interest and payoff date for a loan.

Frequently asked questions

What's the difference between margin and markup?

Margin is gross profit as a percent of the selling price; markup is the same gross profit as a percent of the cost. They describe the same dollars but as percentages of different bases, so markup is always a higher number than margin for any profitable sale.

How do I find the selling price for a target margin?

Set Know to Cost and margin % in the Margin Calculator, enter your cost and target margin percentage, and read the Selling price result — it also shows the equivalent markup.

Why is a 50% markup not a 50% margin?

A 50% markup means profit equals half the cost, but once that profit is added to the price, it's only a third of the final selling price — a 33.33% margin, not 50%.

Is my data sent to a server when I use the Margin Calculator?

No. The calculation happens in your browser as you type. If you're signed in, your inputs sync privately to your account; if you're signed out, nothing is saved anywhere.

Which should I use when pricing a product, margin or markup?

Either works as long as you're consistent, but margin is usually more useful for comparing profitability across products since it's a percentage of revenue — the number most profit and loss statements are built around.