Margin is not markup
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of cost. A product that costs $60 and sells for $100 has a profit of $40. That is a 40% margin ($40 of $100) and a 66.7% markup ($40 of $60). Mixing the two up is one of the most common pricing mistakes.
To set a price from a target margin, divide cost by one minus the margin. For a 40% margin on a $60 cost, that is $60 divided by 0.6, or $100. To set a price from markup, multiply cost by one plus the markup.
Using the calculator
Choose what you know: cost and selling price, cost and target margin, or cost and markup. The tool fills in the rest, including the price multiplier and total profit for the number of units you plan to sell.
Remember to include every cost in the cost field: materials, shipping, platform fees and the time you put in. Use the platform fee calculator to account for fees on marketplaces.
Frequently asked questions
What is the difference between margin and markup?
Margin divides profit by price. Markup divides profit by cost. Markup is always larger than margin for the same product.
How do I find price from a target margin?
Divide your cost by (1 minus the margin). With a 25% margin and $30 cost, the price is $40.
What is a good profit margin?
It varies widely by industry and business model. Digital products often have high margins, while physical goods typically have lower ones.
Can margin be more than 100%?
No. Margin cannot exceed 100%, but markup can.
How do I calculate markup percentage?
Markup = (selling price minus cost) divided by cost, times 100. A $60 cost sold for $100 is a 66.7% markup.
What markup gives a 50% margin?
A 100% markup. The price is twice the cost, so half of the price is profit.
What is a good profit margin for a small business?
It varies widely by industry. Services often have higher margins than physical products, so compare with businesses like yours.