Margin and markup calculator
Your margin and markup from cost and price, and the price you need for the margin you want.
Your margin
37.5%
60% markup · $30.00 profit per item
- Markup 60%
- Profit $30.00 per item
You buy at $50.00 and sell at $80.00, so you make $30.00 per item. That’s 37.5% of the price (your margin) and 60% of the cost (your markup).
For a 40% margin, sell at $83.33: a 66.7% markup on your cost.
Where the price goes
- Cost$5063%
- Profit$3038%
I’m not an accountant or a financial advisor. This is an estimate, for information only. Check with a professional before you decide.
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| Margin | Markup | Price | Profit per item |
|---|---|---|---|
| 20% | 25% | $62.50 | $12.50 |
| 25% | 33.3% | $66.67 | $16.67 |
| 30% | 42.9% | $71.43 | $21.43 |
| 40% | 66.7% | $83.33 | $33.33 |
| 50% | 100% | $100.00 | $50.00 |
| 60% | 150% | $125.00 | $75.00 |
How it works
- Profit per item = selling price − cost. If your price includes VAT or GST, take the tax out first: price ÷ (1 + rate). That part isn’t yours; it goes to the tax authority.
- Margin = profit ÷ selling price. Markup = profit ÷ cost. Same profit, a different base: that’s why the markup is always the bigger number.
- To hit a target margin: price = cost ÷ (1 − margin). For a 40% margin on a $50 cost, $50 ÷ 0.6 = $83.33. The matching markup is margin ÷ (1 − margin): 40% ÷ 60% = 66.7%.
- From markup to margin: margin = markup ÷ (1 + markup). A 60% markup is 0.6 ÷ 1.6 = 37.5%.
Worked example
A small store buys a table lamp for $50 and sells it for $80. Profit: $30. Margin: $30 ÷ $80 = 37.5%. Markup: $30 ÷ $50 = 60%. The classic mistake is to want a 40% margin and add 40% to the cost: $50 + $20 = $70, which is only a 28.6% margin. A real 40% margin needs a price of $83.33.
Sources
- Mass.gov — Calculating costs and setting a price (margin versus markup)
- IRS — Publication 334, Tax guide for small business (figuring gross profit)
- GOV.UK — How VAT works
- Australian Taxation Office — How GST works
- New York State Department of Taxation — Recordkeeping for sales tax vendors (tax shown separately on the receipt)
Text checked on September 30, 2026
Good to know
- This is the margin on one item: its cost against its price. Rent, wages, shipping, card fees and ads come out of it too; what’s left after all of them is your net profit.
- Discounts come straight out of your margin: 10% off the $80 lamp takes $8 off your $30 profit, leaving $22, a 30.6% margin.
- If you’re registered for VAT or GST, work with pre-tax prices on both sides: the tax you charge and the tax you pay aren’t your money.
- The price that gives you your margin isn’t automatically a price customers will pay: check it against what the market will bear.
Frequently asked questions
What’s the difference between margin and markup?
Both start from the same profit. Margin divides it by the selling price; markup divides it by the cost. $30 of profit on an $80 sale is a 37.5% margin and a 60% markup. The margin is always the smaller of the two.
How do I turn a markup into a margin?
Margin = markup ÷ (1 + markup): a 60% markup is 0.6 ÷ 1.6 = 37.5%. The other way, markup = margin ÷ (1 − margin): a 40% margin needs a 66.7% markup.
If I double my cost, what’s my margin?
Fifty percent. Doubling the cost is a 100% markup: a $50 item sold for $100 leaves $50 of profit, which is half the price.
Should I include sales tax or VAT in my price?
Not for this math: it’s money you collect for the government. US sales tax is added at the register and shown separately on the receipt, so leave the tax field at 0. In the UK and Australia, prices to customers include VAT or GST: enter the rate and the calculator takes it out before working out your margin.
What margin should I aim for?
There’s no single right number: it depends on your trade, your other costs and what customers will pay. Use the table above to see the price each margin needs with your cost, then check what’s left after rent, shipping and fees.