Profit Margin & Markup Calculator

Worked examples

$40 Unit Cost Sold at $60

You buy wholesale product for $40 and retail it for $60. Result: 33.33% Margin, 50.00% Markup.

Gross Profit = $60 - $40 = $20. Margin = $20 ÷ $60 = 33.33%. Markup = $20 ÷ $40 = 50.00%.

Targeting 40% Margin on $30 Cost

You want a 40% gross profit margin on an inventory item costing $30. Result: Target Price: $50.00 (Markup: 66.67%).

Formula: Price = Cost ÷ (1 - Margin) = $30 ÷ (1 - 0.40) = $30 ÷ 0.60 = $50.00.

Frequently asked questions

What is the main difference between margin and markup?

Margin is profit divided by selling price (revenue), while markup is profit divided by cost. Markup is always higher than margin for the same transaction. For example, a 100% markup corresponds to a 50% profit margin.

Can profit margin ever exceed 100%?

No. Unless a customer pays you to acquire an item with negative cost, profit margin can never be 100% or greater. However, markup can easily be 200%, 500%, or more.

How do you calculate selling price from cost and desired margin?

Use the formula: Selling Price = Unit Cost ÷ (1 - (Target Margin % ÷ 100)). For example, if cost is $30 and desired margin is 40%, Selling Price = $30 ÷ (1 - 0.40) = $30 ÷ 0.60 = $50.00.

If you buy an item for $50 and sell it for $100, what is the margin and markup?

Gross profit is $50. The profit margin is 50% ($50 profit ÷ $100 price), whereas the markup is 100% ($50 profit ÷ $50 cost).

How do you convert markup percentage into margin percentage?

Formula: Margin = Markup ÷ (1 + Markup). For instance, a 50% markup (0.50) converted to margin is 0.50 ÷ 1.50 = 33.33% margin.