What is the difference between markup and margin?

Markup = (Price − Cost) / Cost. Margin = (Price − Cost) / Price. A 50% markup gives a 33% margin; they are not interchangeable.

Why does a 50% markup only give 33% margin?

Because margin divides profit by the larger selling price. The higher your markup, the more markup and margin diverge.

Which should I use for pricing?

Many businesses target a margin and back into the price. This calculator shows both so you can move between them.

What is the difference between markup and margin?

Markup = (price − cost) ÷ cost. Margin = (price − cost) ÷ price. A 50% markup gives a 33% margin; they are not interchangeable, and mixing them up leads to under-pricing.

Which should I use for pricing?

Many businesses target a margin and back into the price. This calculator shows both so you can move between them: enter a markup to see the implied margin, or work backwards from a target margin to the markup you need.

Finance Calculators

Markup & Margin Calculator

Markup and margin both describe profit relative to price, but from different bases — markup is profit as a percentage of cost, while margin is profit as a percentage of the selling price. Confusing them is a common pricing mistake.

Enter the unit cost and the markup percentage you want to apply. The calculator returns the selling price, the profit, and the equivalent gross margin.

It is the tool to reach for when setting a price from a cost, or when a target margin must be turned into a selling price without confusing the two bases.

Unit cost

Markup%

Currency

Enter your values to see the result.

How this is calculated

Markup and margin both describe profit relative to price, but from different bases, and confusing them is a common pricing mistake. Markup is profit as a percentage of cost: (price − cost) ÷ cost. Margin is profit as a percentage of the selling price: (price − cost) ÷ price. This calculator takes a unit cost and a markup percentage, sets the selling price as cost × (1 + markup), then reports the profit and the equivalent gross margin.

Because margin divides profit by the larger selling price, it is always lower than the markup that produced it. A 50% markup gives a 33% margin; a 100% markup gives a 50% margin. The two diverge further as the markup rises.

The model handles a single product with a single cost. It does not include volume discounts on materials, fixed costs that must be covered before profit begins (use the break-even calculator for that), sales tax or VAT, or the effect of price sensitivity on how many units you can actually sell at the chosen price.

Worked example

A product costs $40 to make, and you apply a 50% markup.

1Selling price = 40 × (1 + 0.50) = $60.
2Profit per unit = 60 − 40 = $20.
3Gross margin = 20 ÷ 60 × 100 = 33.3% — lower than the 50% markup because margin divides by the selling price.

Frequently asked questions

What is the difference between markup and margin?: Markup = (Price − Cost) / Cost. Margin = (Price − Cost) / Price. A 50% markup gives a 33% margin; they are not interchangeable.
Why does a 50% markup only give 33% margin?: Because margin divides profit by the larger selling price. The higher your markup, the more markup and margin diverge.
Which should I use for pricing?: Many businesses target a margin and back into the price. This calculator shows both so you can move between them.
What is the difference between markup and margin?: Markup = (price − cost) ÷ cost. Margin = (price − cost) ÷ price. A 50% markup gives a 33% margin; they are not interchangeable, and mixing them up leads to under-pricing.
Which should I use for pricing?: Many businesses target a margin and back into the price. This calculator shows both so you can move between them: enter a markup to see the implied margin, or work backwards from a target margin to the markup you need.

Related calculators

Method: markup on cost converted to selling price and gross margin. No external data source. Last updated: September 2026.

These results are indicative estimates for planning only and do not constitute financial advice. Actual loan terms, tax rules, investment returns and product conditions vary by country, provider and your personal circumstances. Always confirm figures with your bank, tax authority or a qualified financial adviser before making decisions.