Markup vs Margin Calculator
See the profit your pricing produces and understand the difference between markup and margin: two ways of describing the same gap between cost and selling price, calculated in both directions.
Last updated: May 2026
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About this calculator
Markup and margin both describe the gap between cost and price, but against different bases. Markup is profit as a percentage of cost: markup% = (sellingPrice - unitCost) / unitCost x 100. Margin is profit as a percentage of the selling price: margin% = (sellingPrice - unitCost) / sellingPrice x 100. They are linked: margin = markup / (1 + markup), and markup = margin / (1 - margin). That is why a 50% markup on a $40 item (price $60) is only a 33.3% margin. This calculator takes your actual cost, price, and volume and returns the bottom line: net profit = (sellingPrice - unitCost) x unitsSold - fixedCosts, with the markup and margin percentages explained so you can price in whichever convention your industry uses.
How to use
Suppose each unit costs $40, sells for $100, you sell 500 units, and you carry $8,000 in fixed costs. The per-unit profit is $100 - $40 = $60. As a markup that is 60 / 40 = 150%; as a margin it is 60 / 100 = 60%. Gross profit is $60 x 500 = $30,000, and after $8,000 of fixed costs your net profit is $22,000. Enter your own figures to convert between markup and margin and see the profit they generate.
Frequently asked questions
What is the difference between markup and margin in pricing?
Markup measures profit relative to cost, while margin measures the same profit relative to the selling price. Because the selling price is always larger than the cost, the margin percentage is always smaller than the markup percentage for the same item. Confusing the two is a classic pricing mistake: aiming for a 40% margin but only applying a 40% markup leaves you short, since a 40% margin actually requires about a 67% markup.
How do I convert markup to margin and back again?
To convert a markup into a margin, divide the markup by one plus the markup (as decimals): a 0.50 markup becomes 0.50 / 1.50 = 0.333, or 33.3% margin. To convert a margin into the markup you need, divide the margin by one minus the margin: a 0.40 margin becomes 0.40 / 0.60 = 0.667, or 66.7% markup. This calculator shows both figures from your cost and price so you never have to guess which one a supplier or report is quoting.
Why is my net profit lower than my gross margin suggests?
Gross margin only reflects the difference between price and the direct cost of goods. Net profit also subtracts fixed costs such as rent, salaries, and software that you pay regardless of how much you sell. A healthy gross margin can still produce a small or negative net profit if your sales volume is too low to cover those fixed costs, which is why this calculator subtracts fixed costs to show the true bottom line.