Enter your cost and one other value to see results
Markup vs. margin — what is the difference?
Markup and margin both measure profitability, but they use different baselines. Markup expresses profit as a percentage of your cost — what you added on top of what you paid. Gross margin expresses profit as a percentage of the selling price — what you keep from every dollar a customer pays you.
The same profit always produces a larger markup percentage than margin percentage. If you buy a product for $60 and sell it for $100, your profit is $40. That is a 66.7% markup on cost, but only a 40% margin on revenue. Using both figures interchangeably is one of the most common pricing mistakes in small business — it leads to systematic underpricing and unexpected cash flow gaps.
The practical rule: a 50% markup equals only a 33.3% gross margin. If your business requires a 50% margin to cover overhead and salaries, you need a 100% markup on cost — not 50%.
How to use this calculator
Cost is always the starting point. Enter what you paid for the product or service — your cost of goods sold. Then fill in exactly one of the three remaining fields and the calculator updates instantly.
Enter a selling price to verify existing pricing. The calculator will show markup percentage, gross margin, and gross profit in your chosen currency. Use this to audit products you are already selling.
Enter a desired margin to work backward to the right price. If your business needs a 40% gross margin to stay profitable, the calculator sets the minimum selling price and shows the corresponding markup — so you never underprice again.
Enter a desired markup for cost-plus pricing. Type 50 for 50% markup and see the selling price along with the actual margin that produces — which, for a 50% markup, is 33.3%, not 50%. The visual bars make this gap immediately obvious.
For a full profitability picture across gross, operating, and net levels, pair this tool with our Profit Margin Calculator.
Frequently Asked Questions
How do you calculate markup and margin?
markup = 40/60 × 100 = 66.7%, and margin = 40/100 × 100 = 40%.Is 20% margin the same as 25% markup?
Markup = Margin / (1 − Margin), so 0.20 / 0.80 = 0.25 (25%).What is the difference between 30% margin and 30% markup?
What margin is a 45% markup?
Margin = Markup / (1 + Markup) = 0.45 / 1.45 = 0.3103 (31.03%). This means roughly 31 cents of every dollar collected counts as gross profit.Why is markup always a higher percentage than margin for the same profit?
$40 / $60 cost = 66.7% markup, but $40 / $100 revenue = 40% margin.