Markup is counted on the cost, margin on the selling price. An item bought for 80 and sold for 100 has a 25% markup and a 20% margin. Choose what you know – cost and markup, cost and margin, or cost and price – and the calculator gives the rest, plus the price with sales tax or VAT if you add a rate.
Markup to margin
| Markup | Margin |
|---|---|
| 10% | 9.09% |
| 20% | 16.67% |
| 25% | 20.00% |
| 30% | 23.08% |
| 40% | 28.57% |
| 50% | 33.33% |
| 60% | 37.50% |
| 75% | 42.86% |
| 100% | 50.00% |
| 150% | 60.00% |
| 200% | 66.67% |
Doubling the cost (a 100% markup, often called “keystone” pricing in retail) gives a 50% margin. Margin can approach 100% but never reach it; markup can be any size.
The most expensive mistake
Many businesses aim for a margin but apply it as a markup. If you want a 30% margin on an item costing 70:
- Right: 70 ÷ (1 − 0.30) = 100. Profit 30, which is 30% of 100.
- Wrong: 70 + 30% = 91. Profit 21, which is only 23.1% of 91.
On sales of a million a year, that mistake costs about 69,000 in profit.
Formulas
| You know | Selling price | Markup | Margin |
|---|---|---|---|
| Cost and markup | Cost × (1 + markup) | – | Markup ÷ (1 + markup) |
| Cost and margin | Cost ÷ (1 − margin) | Margin ÷ (1 − margin) | – |
| Cost and price | – | (Price − cost) ÷ cost | (Price − cost) ÷ price |
Tax goes on top
Calculate markup and margin on prices before sales tax or VAT: the tax is collected for the government, not earned. Enter your tax rate and the calculator adds it to the selling price for the shelf. To work the other way – from a price with tax to the price without – use the VAT calculator.
What the margin has to cover
Gross margin is not profit in the bank. It has to pay for rent, wages, shipping, card fees, returns and marketing before anything is left. Industries with high overheads need far higher margins than a business selling online from home.
Once zet4u is saved on your phone, the calculator works offline – at a trade fair or in a supplier’s warehouse.
Frequently asked questions
What is the difference between markup and margin?
Markup is the profit as a percentage of the cost; margin is the profit as a percentage of the selling price. A product that costs 80 and sells for 100 has a 25% markup and a 20% margin.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup is 0.5 ÷ 1.5 = 33.3% margin. To go back: markup = margin ÷ (1 − margin).
How do I set a price for a target margin?
Divide the cost by (1 − margin). For a 40% margin on a cost of 60: 60 ÷ 0.6 = 100. Adding 40% to the cost would give only 84, a margin of 28.6%.
Can a margin be over 100%?
No. Margin is a share of the price, so it is always below 100%. Markup has no upper limit: selling at five times the cost is a 400% markup.
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