Markup and Margin Calculator: Cost, Price and Profit
Markup and Margin Calculator
Enter any two of cost, price, markup and margin, and the other two follow. The tool uses the last two boxes you touched as the knowns. Markup is profit as a share of cost; margin is the same profit as a share of price, and confusing the two is the oldest pricing mistake in business.
The two percentages are locked together: margin equals markup over 100 plus markup, and markup equals margin over 100 minus margin, both times 100. A 25 percent markup is a 20 percent margin, a 100 percent markup is a 50 percent margin, and a 100 percent margin is impossible, which is why the tool refuses it rather than inventing a price.
How to use this tool
Enter any two of the four quantities, cost, selling price, markup percent, margin percent, and the other two follow. The tool takes the last two boxes you touched as the knowns, so pivoting from a cost-plus question to a target-margin question is just typing in different boxes.
Same profit, two percentages, endless confusion
Markup and margin describe the identical dollar of profit against two different bases. Markup is profit over cost; margin is profit over price. Buy at 100, sell at 125: the 25 of profit is a 25 percent markup and a 20 percent margin, simultaneously and always. The two are locked together algebraically, margin equals markup over 100 plus markup, and the gap between them widens as prices rise: a 100 percent markup is only a 50 percent margin.
The expensive version of the confusion is pricing for a target margin using the markup formula. A business wanting 40 percent margin that adds 40 percent to cost actually earns 28.6 percent margin, and on thin-margin volume that arithmetic slip is the whole profit. Dividing cost by 1 minus the margin, which is what this tool does, is the correct move, and it is also why a 100 percent margin is refused rather than computed: it would require the cost to be zero.
A worked check you can repeat on paper
Cost 100, price 125: markup 25 over 100 is 25 percent, margin 25 over 125 is 20 percent. Now run it backwards both ways: price 125 at 20 percent margin gives cost 125 times 0.8, which is 100; cost 100 at 25 percent markup gives price 125. Every route through the four quantities lands on the same numbers, which is exactly how the tool was verified.
Mistakes that catch people out
Pricing a target margin with the markup formula. As above, the most expensive one. Fix: divide by 1 minus margin, never multiply by 1 plus it.
Quoting margin to a supplier who means markup. The words travel between businesses and the bases silently swap. Fix: quote the dollars alongside the percent; dollars have no base to confuse.
Discounting past the margin. A 20 percent discount on a 20 percent margin product sells at cost. Fix: check the discounted price against cost, not against the sticker.
How this was checked
The solver was verified on the 100-to-125 reference case entered through every pair of knowns, including the pure-percentage pairs, confirming the identities markup 100 percent equals margin 50 percent in both directions, and margin at or above 100 percent is rejected with an explanation rather than a division by zero.
Related Calculators and Reference
See also the Percent Off Calculator for the buyer side of the same arithmetic. Also see the ROI Calculator: return on investment and annualized ROI for money held over time. Also see the Depreciation Calculator: spread equipment costs over their useful life. Also see the Break Even Calculator: how many units a chosen price and margin need to sell to cover fixed costs. Also see the Commission Calculator: sales commission at a flat rate, in tiers or with a split.
Applying a discount to the price this tool produces, and taxing the result, is the Discount and Sales Tax Calculator. Percent change and difference in their general forms are the Percentage Calculator, and blending costs across quantities is the Weighted Average Calculator.