Margin Calculator
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About Margin & Markup
Retail's most expensive vocabulary confusion: a founder prices everything at “40% profit” by adding 40% to cost, reports margins to an investor who hears revenue-based margin, and the books eventually disagree with everyone. The two words are different denominators wearing similar suits.
Two modes: give cost and price to see margin AND markup side by side, or give cost and a target margin to get the correct selling price (with the divide-don't-add math shown). Every result names both numbers so the distinction sticks.
Covering fixed costs is the other half of pricing — the Breakeven Calculator
The Formulas, Untangled
Same profit, two denominators — plus the pricing inverse:
Margin = (price − cost) ÷ PRICE Markup = (price − cost) ÷ COST Price for target margin = cost ÷ (1 − margin%)
Worked example: cost $60, price $100 → $40 profit = 40% margin = 66.7% markup. Pricing for a 40% margin: $60 ÷ 0.60 = $100 ✓. The wrong way — $60 × 1.40 = $84 — delivers only 28.6% margin: an 11-point silent haircut on every sale.
Margin ↔ Markup Conversion
The pairs every pricing conversation eventually needs:
| Margin | Markup | Price on $60 cost |
|---|---|---|
| 20% | 25% | $75.00 |
| 30% | 42.9% | $85.71 |
| 40% | 66.7% | $100.00 |
| 50% | 100% | $120.00 |
| 60% | 150% | $150.00 |
| 75% | 300% | $240.00 |
Markup always exceeds its margin twin, and the gap explodes upward: a 50% margin means doubling cost, a 75% margin means quadrupling it. “Keystone pricing” (2× cost) is exactly the 50% row.
Which Number When
Margin speaks to the P&L: gross margin is revenue minus cost of goods over REVENUE, so 40% margin means 40 cents of every sales dollar survives to cover overhead and profit. Investors, financial statements, and industry comparisons all speak margin — quoting markup in those rooms overstates your health by the table above's gap.
Markup speaks to the pricing workflow: cost is what you know first, so “cost × 1.67” is an executable shelf rule (that particular multiplier delivering the 40% margin). Healthy targets vary wildly by industry — groceries survive on single-digit margins at volume, software enjoys 80%+, restaurants live between — so the useful comparison is your niche's norm, not a universal number. And remember margin here is GROSS: rent, payroll, and marketing still eat from it before profit.
Frequently Asked Questions
What's the difference between margin and markup?
Denominators. Margin = profit ÷ price (share of revenue kept); markup = profit ÷ cost (how much you raised it). Cost $60, price $100: 40% margin, 66.7% markup, same $40 — mixing them misprices inventory or misleads investors, depending on the direction.
How do I price for a 40% margin?
Divide cost by 0.60: a $60 cost needs $100. Adding 40% instead ($84) yields only a 28.6% margin — the single most common pricing spreadsheet error, and the reason this calculator exists.
What is a good profit margin?
Industry-relative: groceries run single digits, restaurants 3–10% net, retail 25–50% gross, services and software far higher. Compare gross-vs-gross within your niche; a “low” margin at huge volume (Costco) can out-earn a high one at trickle volume.
What is keystone pricing?
Doubling cost (100% markup = 50% margin) — traditional retail's default shelf rule. It survives as a starting point, not a law: competitive categories price below keystone, and specialty/low-velocity goods above it.
Can a margin exceed 100%?
No — margin is profit over price, and profit can't exceed the price itself. MARKUP exceeds 100% routinely (any price beyond double cost). Someone claiming a 300% margin means markup; the table above translates.
Is this gross or net margin?
Gross — price against unit cost, before overhead, marketing, rent, and payroll. Net margin (the bottom line) runs far lower everywhere. Unit pricing uses gross; company health reads net; keeping the adjectives attached prevents both flavors of surprise.
Methodology. This calculator uses standard financial formulas used across the industry. It is reviewed and maintained by the Vast Calculators editorial team.
Last updated · July 11, 2026
Disclaimer. This tool provides estimates for general informational purposes only and is not a substitute for professional financial advice. Always consult a qualified financial advisor before making decisions about your finances.