This margin calculator compares cost and selling price. Defaults are cost 40 and price 100. Profit is 100 − 40 = 60. Margin percent is 60 / 100 × 100 = 60%. Markup percent is 60 / 40 × 100 = 150%.
Margin and markup share the same profit dollars but use different denominators. Confusing them is the most common pricing error in classrooms and small catalogs. If you need a dedicated profit margin workflow with related framing, use the profit margin calculator. This page stays on cost versus selling price margin and markup.
How the formula works
Profit = price − cost. Margin% = profit / price × 100. Markup% = profit / cost × 100. Price is the selling price. Cost is the acquisition or production cost used in the comparison.
Worked example
Enter cost 40 and price 100. Profit = 60. Margin = 60 / 100 = 0.6 → 60%. Markup = 60 / 40 = 1.5 → 150%. The tool should report margin 60%, markup 150%, and profit 60.
| Input | Value |
|---|---|
| Cost | 40 |
| Selling price | 100 |
| Profit | 60 |
| Margin | 60% |
| Markup | 150% |
How to use the fields
- Cost is what you pay (or assign) to obtain the item.
- Price is the selling price charged to the customer.
Margin versus markup in one sentence each
Margin asks what share of the selling price is profit. Markup asks how large profit is relative to cost. Same 60 dollars of profit can be 60% margin and 150% markup at the same time. Both statements are correct for cost 40 and price 100.
Never say “we need 60% markup” when the policy document actually means 60% margin. Write the denominator word beside every percentage.
Common mistakes
- Calling markup a margin (or the reverse) without checking the denominator
- Using list price as cost when true cost is lower
- Comparing margin percent to markup percent as if they were interchangeable targets
- Omitting profit dollars when only one percentage is quoted
Why both percentages appear
Buyers and sellers often speak different languages. Purchasing talks in markup over cost. Sales leadership often tracks margin on price. Showing both prevents a silent unit mismatch in meetings.
For homework, require students to compute profit first, then both percentages, then label each line.
Classroom drills
Hold cost at 40 and raise price to 120. Profit becomes 80. Margin becomes 80/120 ≈ 66.67%. Markup becomes 80/40 = 200%. Then hold price at 100 and raise cost to 50. Profit becomes 50, margin 50%, markup 100%.
Ask learners to predict which percentage moves more before calculating. Markup reacts more violently when cost is the smaller base.
Reporting habits
Write “cost 40, price 100, profit 60, margin 60%, markup 150%” as one block. A lone “60%” is ambiguous until margin or markup is named.
Currency units should match on cost and price. Mixing currencies without conversion invalidates both percentages.
Pricing conversations without jargon traps
If a target is “50% margin,” solve for price from cost: price = cost / (1 − 0.50). At cost 40 that price is 80. If the target was actually “50% markup,” price = cost × 1.50 = 60. Those are different selling prices. Spell out which target you mean before you negotiate.
This calculator reports both directions from known cost and price. Target solving is a separate planning step you can do by hand beside the results.
Relationship to broader profit tools
Gross margin on a full income statement can include more cost categories than a single unit cost field. Keep this page for unit cost versus selling price checks. Broader profit margin narratives can sit on the profit margin calculator when that framing fits better.
Neither page replaces accounting software or tax advice. They clarify the arithmetic labels.
Discount stacks before margin talk
If a list price is 100 but the customer pays 90 after a discount, use 90 as the selling price in this tool. Feeding the list price while cash received is lower inflates both margin and markup.
Work the discount outside the calculator, lock the true selling price, then enter cost and that net price. The 40 and 100 default remains the clean classroom case when no discount applies.
Limitations
No tax, no discounts stack, no overhead allocation, and no multi product mix. Output is profit, margin percent, and markup percent from one cost and one price.