Markup vs Margin Calculator
The ultimate pricing tool for businesses. Instantly calculate profit, markup percentage, and gross margin to ensure your products are profitable.
Price Your Products for Profit
Setting the right price is the most critical decision for any business. Price too high, and you lose sales; price too low, and you lose money. Our **Markup vs Margin Calculator** helps you find the sweet spot. Whether you are a retailer, wholesaler, dropshipper, or manufacturer, this tool clarifies the often-confusing relationship between Cost, Revenue, Markup, and Margin.
Markup vs. Margin: What's the Difference?
These two terms are often used interchangeably, but they mean very different things. Confusing them can lead to serious pricing errors.
What is Markup?
Markup is the percentage amount you add to the cost to arrive at the selling price. It is calculated relative to Cost.
What is Margin?
Margin (Gross Profit Margin) is the percentage of the selling price that is profit. It is calculated relative to Revenue.
Key Takeaway: Markup is always a higher percentage number than Margin for the same transaction. For example, a 50% Markup results in a 33.3% Margin. A 100% Markup results in a 50% Margin.
How to Use This Calculator
You can use this tool in multiple ways depending on what information you have:
- To Find Profit: Enter Cost and Revenue. We calculate Markup % and Margin %.
- To Find Selling Price: Enter Cost and Desired Margin %. We calculate the Revenue needed to hit that target.
- To Check Feasibility: Enter Revenue (market price) and Desired Markup. We tell you the maximum Cost you can afford to pay suppliers.
Retail Pricing
A clothing store buys a shirt for $20. They want a 50% margin. They must sell it for $40. (This is a 100% markup).
SaaS Business
Software companies have low "Cost of Goods" (hosting), leading to very high Gross Margins (often 80%+), which investors love.
Construction
Contractors usually work on "Cost Plus". If materials cost $10,000 and they charge a 20% markup, the bill is $12,000.
Frequently Asked Questions
Can margin be more than 100%?
No. Margin calculates profit as a slice of revenue. Since profit cannot exceed the total revenue, margin is always less than 100%. However, Markup can be infinite (e.g., 500% markup).
Which one should I use?
Use Margin when discussing profitability with accountants, banks, or investors. They care about how much of each dollar you keep.
Use Markup for daily pricing decisions and when talking to suppliers or customers.
What is a "Keystone" pricing strategy?
Keystone pricing is a standard retail method where you simply double the cost price. Cost $50 -> Sell $100. This represents a 100% Markup and a 50% Margin.
How does discount affect margin?
Discounts destroy margin faster than you think. If you have a 30% margin and give a 20% discount, your profit doesn't drop by 20%—it drops by nearly two-thirds! Always check your "Margin after Discount" using this calculator.
Does this include VAT/Tax?
Technically, Gross Margin is calculated on Net Revenue (Amount excluding tax). Do not include sales tax in your "Revenue" input if you want accurate accounting profit figures.
Financial Accuracy
Calculations are mathematically precise based on inputs. However, accurate accounting requires considering other variable costs (shipping, fees).
Data Privacy
Your pricing strategy is your trade secret. We do not track, store, or see your data. It stays on your device.