Margin Calculator

From the two prices you already have — cost and selling — see profit, margin of the ticket, and markup of cost, so the two percents stop being used as synonyms.

How to use

Enter cost (what you paid or allocated).
Enter the selling price (what the customer pays before you add tax, if that is your convention).
Read profit, margin % and markup %.
Use the markup calculator only when you are choosing a percent to add onto cost, not reading two prices.

How it works

Profit here is selling price minus cost. Margin is that profit as a percent of the selling price. Markup is the same profit as a percent of cost. Cost 80, sell 100: profit 20, margin 20%, markup 25%. Memorise one pair if you remember nothing else.

A target “20% margin” means profit is one fifth of the ticket. Cost must be 80% of the selling price, so sell = cost ÷ 0.80. People who apply 20% markup instead sell at 1.20 × cost and only achieve a 16.7% margin. That is the usual briefing-room mix-up.

Break-even is cost = selling price: profit 0, both percents 0. A selling price of 0 with positive cost is a 100% loss on the ticket (margin −100%) if the tool allows the signs; this page still reports the identity.

Cost 0 and a positive selling price makes margin 100% and markup undefined — there is no cost to take a percent of.

This is a two-price identity, not a P&L. Overhead, tax, returns and card fees are not subtracted. If you need a discount from a list, use Discount. If you only have cost and a policy percent, use Markup.

Formula

Profit = selling price − cost
Margin % = (profit ÷ selling price) × 100
Markup % = (profit ÷ cost) × 100

Worked examples

Classic 20% margin
cost 80, selling 100 → profit 20, margin 20%, markup 25%
Break-even
cost 50, selling 50 → profit 0, margin 0%, markup 0%

Useful notes

Same profit, two denominators: selling price vs cost.
Not an accounting statement and not a tax-inclusive figure.
Zero selling price makes margin undefined.

FAQ

How do I calculate profit margin?: Subtract cost from selling price, divide by selling price, multiply by 100. (100 − 80) ÷ 100 = 20%.
Why are margin and markup different?: They use different denominators. The same 20 profit is 20% of 100 but 25% of 80.
What if cost is zero?: Profit equals the selling price and margin is 100%. Markup is not shown, because dividing by zero cost is undefined unless profit is also zero.
What selling price gives a 20% margin on cost 80?: Sell = 80 ÷ 0.80 = 100. Check on this page: cost 80, selling 100.
Is this net margin after overhead?: No. It is the gap between the two numbers you typed. Subtract other costs yourself if you need a net figure.

Guides

Markup Versus Margin
Markup adds a percent of cost onto the cost. Margin is that same profit divided by the selling price. The two percents match only at zero and are never interchangeable on a quote.

Related tools

See all Math tools.