Margin and Markup Calculator
Enter your cost and selling price to instantly see gross profit, margin percentage, and markup percentage. The pricing table below shows exactly what price you need to charge to hit common margin targets — the actionable answer most calculators bury in footnotes.
Margin
40.00%
profit ÷ price
Markup
66.67%
profit ÷ cost
Gross profit
$40.00
Price to hit target margin
| Target margin | Price needed | Profit |
|---|---|---|
| 10% | $66.67 | $6.67 |
| 20% | $75.00 | $15.00 |
| 30% | $85.71 | $25.71 |
| 40% | $100.00 | $40.00 |
| 50% | $120.00 | $60.00 |
Pricing ladder
How it works
Margin and markup both express profit, but they divide by different numbers — and confusing them is one of the most common pricing mistakes in business. Margin divides gross profit by the selling price (what the customer pays), while markup divides the same profit by cost (what you paid). A 50% markup and a 50% margin are not the same thing: a product that costs $100 with a 50% markup sells for $150, but a 50% margin on a $100 cost means a selling price of $200.
To price for a target margin, you cannot simply add a percentage to cost. Instead, use the formula: price = cost ÷ (1 − target margin). This is why a 50% margin requires doubling your cost — cost ÷ (1 − 0.50) = cost × 2. The pricing table calculates this for five common margin targets (10 %, 20 %, 30 %, 40 %, 50 %) so you can choose a target and read off the required price directly without doing the algebra yourself.
A negative margin means you are selling below cost — a loss on every unit. The calculator does not reject this scenario because selling at a loss is sometimes intentional (loss leaders, clearance, onboarding discounts), and understanding by how much you are losing is essential to deciding whether the strategy is sustainable. Identifying the loss at the product level is the first step to fixing it.
Frequently asked questions
What's a good margin for my industry?+
There is no universal number — it varies enormously by industry, business model, and competitive position. Software and digital products often achieve margins above 70 %, while grocery retail may run on 2–5 % net. Manufacturing, services, and hospitality all sit in different ranges. Use industry benchmarks from trade associations or public company filings as a starting point, then compare against your own fixed costs and growth targets. This calculator cannot tell you what margin is right for your business — that depends on context a tool cannot see.
Which should I use for pricing — margin or markup?+
Both methods produce the same selling price if used correctly; the choice is mainly one of convention. Retailers and finance teams typically think in margin because it maps directly to the income statement (gross profit ÷ revenue). Manufacturers and wholesalers often use markup because cost is the known quantity and markup is layered on top. If your industry has a standard, match it so your numbers are comparable to benchmarks. The critical rule: never mix the two formulas in the same calculation.
How do discounts affect margin?+
Discounts cut margin faster than they appear to. If you sell at a 40 % margin and offer a 10 % discount, your new margin is not 30 % — it drops to roughly 33 % (because 10 % off the price is a larger share of profit, not cost). A useful rule of thumb: every percentage point of discount costs roughly 1.5–2 percentage points of margin at typical retail margins. You can check the exact impact here by entering your discounted price as the new selling price and comparing the result to your original margin.