Profit margin and markup calculator

From the cost and one more figure, the selling price, the profit, the margin and the markup.

I know the price I want a margin I want a markup

Cost

Selling price

Currency

Profit margin

Markup

Selling price

Profit

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The formulas

To find	Formula	Cost 60, price 100
Profit	price − cost	40
Margin	profit ÷ price	40 ÷ 100 = 40%
Markup	profit ÷ cost	40 ÷ 60 = 66.67%
Price for a margin	cost ÷ (1 − margin)	60 ÷ 0.60 = 100
Price for a markup	cost × (1 + markup)	60 × 1.6667 = 100

Margin and markup side by side

Markup	Margin
10%	9.09%
25%	20%
33.33%	25%
50%	33.33%
66.67%	40%
100%	50%
200%	66.67%

Questions

What is the difference between margin and markup?

Both compare profit with a price, but against different figures. Margin is profit as a share of the selling price. Markup is profit as a share of the cost. Bought for 60 and sold for 100, the profit of 40 is a 40% margin and a 66.67% markup.

How do I calculate profit margin?

Margin = (selling price − cost) ÷ selling price × 100. A price of 100 with a cost of 60 gives a margin of 40%.

How do I set a price for the margin I want?

Divide the cost by 1 minus the margin. For a 40% margin on a cost of 60: 60 ÷ 0.60 = 100. Adding 40% to the cost gives 84, which is only a 28.6% margin.

How do I turn a markup into a margin?

Margin = markup ÷ (1 + markup). A 50% markup is a 33.33% margin. Going the other way, markup = margin ÷ (1 − margin), so a 50% margin is a 100% markup.

Why can’t the margin be 100% or more?

Because margin is profit as a share of the price, and the profit can never be the whole price unless the cost is zero.

Should the prices include sales tax or VAT?

No. Use prices and costs before sales tax or VAT, which you collect for the tax authority and do not keep.

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