Markup & Margin Calculator
Selling price, profit, markup percent, and margin percent from any two known values
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What this calculator computes
The markup-and-margin calculator handles the four-way relationship between cost, selling price, profit, markup percentage, and gross-margin percentage that underlies retail and wholesale pricing decisions. Markup is the profit expressed as a percentage of the cost (the "cost-up" view used in purchasing and inventory accounting), while gross margin is the profit expressed as a percentage of the selling price (the "sell-down" view used in income statements and financial reporting). The two are not the same number for the same transaction: a £20 item sold for £30 has a £10 profit, a 50% markup (10/20), and a 33.3% gross margin (10/30). The asymmetry is the single largest source of pricing confusion between cost accountants and sales managers, and the calculator surfaces both numbers from any of the input pairings — cost + markup%, cost + margin%, cost + price, or price + margin% — so the right one ends up on whichever spreadsheet is being filled out. For retail-pricing decisions, the calculator also computes the breakeven discount: the maximum percentage a price can be reduced before a sale loses money, which equals the gross margin percentage. A 33.3% margin item can be discounted up to 33.3% before zero profit; deeper discounts incur loss. Manufacturers and wholesalers typically work in markup terms because their cost is the controllable variable; retailers and SaaS companies typically work in margin terms because their selling price is the customer-facing variable.
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The formula
Formula
markup% = (price − cost) / cost × 100 margin% = (price − cost) / price × 100
Worked example
When to use this calculator
Use this calculator any time you need to set a selling price from a known cost, back out the cost from a price and target margin, or translate between markup and margin percentages when two parties (typically purchasing and sales) are quoting the same number two different ways. The most common cases are retail and wholesale pricing decisions (setting the shelf price from a wholesale cost), restaurant and food-service menu engineering (where target margins drive portion sizing and ingredient cost), SaaS and digital-goods pricing (where margins are typically 70%+ once fixed costs are covered), markdown and clearance planning (using the breakeven-discount output to set a floor), and competitive-pricing analysis (working from a competitor's price back to an estimated cost given assumed margin norms). The calculator is also useful in financial-statement analysis, where the income statement reports gross margin but the COGS line works on markup against unit cost.
Common input mistakes
- Confusing markup and margin percentages. A 50% markup is a 33.3% margin; a 100% markup is a 50% margin; a 200% markup is a 66.7% margin. The two are mathematically distinct and converge only at 0%. Quoting "50% markup" when "50% margin" is meant overstates the price by a factor that grows with the percentage; for high-margin software products it can mean a 100% pricing error.
- Subtracting the discount percentage from the margin percentage to find breakeven. A 40% margin item can be discounted up to 40% before zero profit, not 60%. The breakeven discount equals the margin, not 100% minus the margin. Discounting beyond the margin produces a loss, even if the price is still well above the cost in absolute terms.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit divided by cost; margin is profit divided by selling price. A £20 cost item sold for £30 has £10 profit, a 50% markup (10/20) and a 33.3% margin (10/30). Markup is always larger than margin for the same transaction; the two converge at 0% (zero profit) and diverge as profit increases. Wholesale and purchasing typically use markup; retail and finance typically use margin.
How do I convert between markup and margin?
Margin = markup / (1 + markup), and markup = margin / (1 − margin), with both percentages expressed as decimals. A 50% markup becomes 0.50 / 1.50 = 33.3% margin; a 75% margin becomes 0.75 / 0.25 = 300% markup. The conversions matter when comparing prices set in different conventions, particularly between manufacturing (markup-based) and retail (margin-based) parts of a supply chain.
What margin should I use for retail pricing?
Typical gross margins vary widely by industry: grocery 20–25%, restaurants 60–70% on food and 80%+ on alcohol, clothing 50–60%, electronics 25–35%, software and SaaS 70–90%. Higher margins reflect higher fixed costs, brand premiums, or operational overheads that the gross margin must cover. The right margin for a specific product is whatever level the market will bear given competition and value perception, constrained below by cost recovery.
How does markup relate to clearance and discount strategy?
The breakeven discount equals the gross margin: a 40% margin item can be discounted up to 40% before zero profit. Setting an initial markup high enough to absorb planned end-of-season markdowns is the foundation of fashion-retail pricing — a 200% markup (66.7% margin) leaves room for a 50% sale and still preserves 33.3% margin. The calculator's breakeven-discount output makes this floor explicit.
Why do my markup and margin numbers disagree with my supplier?
Suppliers and customers often quote the same percentage in different conventions. A supplier saying "30% margin" means £30 profit on £100 sale (cost £70); a customer hearing "30% markup" expects £30 profit on £70 cost (sale £91). Always confirm whether a percentage is expressed against cost (markup) or against selling price (margin) before agreeing terms. The calculator translates between the two so the same physical transaction reads correctly from both sides.