Margin vs Markup Calculator
Convert between profit margin and markup, and find price from cost or cost from price.
Margin vs Markup: Two Views of the Same Profit
Profit margin is profit expressed as a percentage of the selling price. Markup is the same profit expressed as a percentage of cost. Same dollars, different denominators — which is why markup is always the larger number on a profitable sale. A 40% margin is a 66.7% markup. Confusing the two is one of the most expensive spreadsheet errors in commerce: apply a target margin as if it were markup and you quietly under-price every SKU in your catalog.
This margin vs markup calculator converts between the two instantly and works in every direction — enter cost and price to get both percentages, or set a target margin and get the exact price you need to charge. Free, no sign-up, runs entirely in your browser.
The formulas, with a worked example
Margin = Profit / Price and Markup = Profit / Cost. Take a product that costs you $60 and sells for $100. Profit is $40. Margin = 40 / 100 = 40%. Markup = 40 / 60 = 66.7%.
To convert directly: Markup = Margin / (1 − Margin) and Margin = Markup / (1 + Markup). To price from cost at a target margin, divide — never multiply: Price = Cost / (1 − Margin). At a 40% target margin on $60 cost, that's 60 / 0.60 = $100.
| Margin | Equivalent markup |
|---|---|
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100% |
What's a good margin?
It depends entirely on business model. As directional 2026 medians: software and SaaS gross margins run 75–80%+, ecommerce and DTC gross margins land around 40–50% (with net margins often under 10% after fees, shipping and ad spend), retail and distribution sit near 20–30%, and service businesses typically clear 50–70%. See how your other unit economics stack up on our benchmarks page.
If you sell online, gross margin is only the starting line — run your true per-order profit through the ecommerce profit margin calculator, and remember that gross margin directly sets your break-even ROAS (it's simply 1 divided by gross margin). A 50% margin means every ad dollar must return $2 just to tread water.
The mistake that quietly kills pricing
The classic error: multiplying cost by (1 + 40%) to "get a 40% margin." That $60 product priced at $84 actually carries a 28.6% margin — you've handed back over a quarter of your intended profit on every unit, and you won't see it until the P&L rolls up. The fix is mechanical: margin targets divide cost by (1 − margin); markup targets multiply cost by (1 + markup). Two more nuances: this is gross margin at the unit level, before marketplace fees, shipping, ad cost and overhead — don't quote it as net. And if you're pricing subscription tiers rather than physical units, your blended price point shows up downstream as ARPU, so margin discipline at the tier level compounds across the whole book.