Margin & Markup
Convert margin/markup and compute price/cost.
These tools are provided for educational and operational guidance only. Results are estimates and may not reflect all factors in your business. Always review calculations and use your own professional judgement before making decisions.
What is this tool?
This calculator helps you move quickly between cost, margin, markup, and selling price. It is especially useful when pricing products, negotiating with customers, or checking if a proposed promotion still protects your required margin.
Formula
Given cost and target margin, the tool uses:
Price = Cost / (1 − Margin%)
It then computes markup:
Markup% = (Price − Cost) / Cost × 100
- Cost = unit cost of the product or service.
- Margin% = target profit as a percentage of selling price.
- Markup% = profit as a percentage of cost.
Example
Suppose the cost of a product is 10 and you want a 40% margin.
Price = 10 / (1 − 0.40) = 16.67
Markup% = (16.67 − 10) / 10 × 100 ≈ 66.7%.
In business terms, the calculator shows you that a 40% margin corresponds to a much higher markup on cost, which is often misunderstood in day-to-day discussions.
When should you use this tool?
- When setting list prices based on cost-plus rules.
- When checking if negotiated discounts still protect minimum margin.
- When aligning sales and finance teams around margin versus markup language.
- When comparing different suppliers or unit costs for the same product.
- When building quick pricing scenarios before running a full P&L.
How this tool helps your business
- Makes margin math transparent, reducing pricing mistakes.
- Speeds up commercial decisions without sacrificing profitability discipline.
- Improves communication between sales, finance, and management about price changes.
- Supports more professional negotiations with customers and suppliers.
Related tools
- Break-Even Point Calculator – see how margin, price, and volume interact to cover fixed costs.
- CSV Profit Analyzer – analyze actual transactions and margins using exported sales data.
- Discount Calculator – quantify the impact of discounts on price and margin.
- DCF Pricing Helper – evaluate prices for long-term or subscription-type deals based on cash flows.
Frequently Asked Questions
Why do margin% and markup% give different numbers?
Margin is calculated on selling price and markup on cost, so for the same price-cost pair margin% is always lower than markup%. This tool shows both to avoid confusion.
Can I use this for tax-inclusive prices?
Yes, as long as you are consistent. Use net-of-tax cost and net-of-tax target prices when you enter numbers, then add taxes afterwards if needed.
What margin should I aim for?
Target margins depend on your industry, risk, and overhead structure. Use this tool to test scenarios and check if proposed prices respect your minimums.
Does this calculator handle multi-level discounts?
It focuses on the base relationship between cost, margin, markup, and price. For discount ladders, you can combine it with the Discount Calculator to assess effective margins.