Enter a cost and either a markup or a margin: get the selling price, the profit, and the other percentage instantly. The quickest way to stop confusing the two.
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Calculate price, markup & margin
Choose whether you want to enter a markup or a margin, then type your numbers.
Selling price
$0.00
profit per unit
Markup
0%
profit ÷ cost
Margin
0%
profit ÷ price
Margin is always lower than markup. If you quote a margin figure as if it were a markup, you will underprice every single item.
Markup, margin and the wholesale-to-retail multipliers makers actually use, one page, no spam.
Pricing a handmade product? Start from the true cost.
Markup and margin only work when the cost underneath them is right. BatchCost totals your materials, labour and overhead into a true cost per item, then applies your markup to reach wholesale and retail prices.
Markup and margin both describe profit, but they measure it against different things. Markup is profit as a percentage of your cost.Margin is profit as a percentage of your selling price. Because cost is always smaller than price, the markup percentage is always larger than the margin percentage for the same product, and that gap is where a lot of accidental underpricing happens.
A worked example
Take an item that costs you 10 to make and sells for 15. The profit is 5. Measure that 5 against the cost of 10 and you get a 50 percent markup. Measure the same 5 against the price of 15 and you get a 33 percent margin. Same product, same profit, two very different-looking numbers.
Figure
Calculation
Result
Cost
-
10.00
Price
cost × 1.5
15.00
Profit
price − cost
5.00
Markup
5 ÷ 10
50%
Margin
5 ÷ 15
33%
How to convert between them
The two are linked by a simple pair of formulas, using decimals:
Markup to margin: margin = markup ÷ (1 + markup). A 0.5 markup becomes 0.5 ÷ 1.5 = 0.333, a 33 percent margin.
Margin to markup: markup = margin ÷ (1 − margin). A 0.333 margin becomes 0.333 ÷ 0.667 = 0.5, a 50 percent markup.
Which one should you use?
Neither is more correct. They are two views of the same thing. In practice:
Markup is intuitive when you price up from a known cost, which is how most makers and tradespeople work. "Cost times two" is a markup mindset.
Margin is the language of profitability and appears on most financial reports, so it is useful for comparing products or judging the health of the business overall.
The one rule that matters is consistency. Decide which you are quoting, know how to convert to the other, and never plug a margin figure into a markup calculation by mistake. Do that and your prices will always reflect the profit you actually intended to make.
Frequently asked questions
What is the difference between markup and margin?
Markup is profit measured against your cost; margin is profit measured against your selling price. A product that costs 10 and sells for 15 has a 50 percent markup (5 profit on 10 cost) but a 33 percent margin (5 profit on 15 price). They describe the same profit from two different starting points, which is why they are so easily confused.
How do you convert markup to margin?
Divide the markup by one plus the markup, expressed as decimals. A 50 percent markup is 0.5 divided by 1.5, which equals 0.333, or a 33 percent margin. To go the other way, divide the margin by one minus the margin: a 33 percent margin is 0.333 divided by 0.667, which is a 50 percent markup.
Is margin always lower than markup?
Yes, for any profitable product the margin percentage is always lower than the markup percentage, because margin divides the same profit by the larger selling price rather than the smaller cost. This is exactly why quoting a margin as if it were a markup quietly underprices your work.
Which should I use to price my products?
Markup is often easier when you price up from a known cost, which is common for makers and trades. Margin is the language of profitability and is what most accounts and reports use. The important thing is to be consistent and to know which one you are quoting, because mixing them up leads to prices that are lower than you intended.
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