App Interface
What one unit costs you to buy or make, including freight and packaging if you want them covered.
Markup and margin are not the same number
Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. The same sale always has a higher markup than margin: buying at 800 and selling at 1,000 is a 25% markup but a 20% margin. Pricing with a markup when you meant a margin leaves you short.
| Margin | Markup needed | Price for your cost |
|---|---|---|
What this markup calculator does
Every product price starts with a cost. To turn it into a selling price you add either a markup (a percentage of cost) or aim for a margin (a percentage of the selling price). The two sound alike but give different prices, and mixing them up is one of the most common pricing mistakes in small retail and online selling. This calculator lets you start from either one and shows the selling price, the profit per unit, and both percentages so you can see exactly what you are charging.
How to use it
- Choose I know my markup if you price by adding a percentage on top of cost, or I want a target margin if you know what share of each sale you want to keep.
- Pick a currency. PKR is the default; the selector changes labels only.
- Enter the cost per unit. Include freight, packaging and any per-unit fees you want the price to cover.
- Enter the markup or the target margin percentage.
- Read the selling price, profit, markup and margin. The table below the results lists common margins, the markup each one needs, and the price it gives for your cost.
Markup versus margin
Markup is profit divided by cost. Margin is profit divided by selling price. Because the selling price is always larger than the cost (when you make a profit), the margin is always the smaller of the two numbers for the same sale.
If you want a 25% margin but add a 25% markup, you end up with only a 20% margin. On a large catalogue that gap adds up to a meaningful share of your profit.
Worked examples
Markup: an item costs 800 and you add a 25% markup. The selling price is 800 × 1.25 = 1,000.00. Profit is 200.00. Markup is 200 / 800 = 25%, and margin is 200 / 1,000 = 20%.
Target margin: an item costs 600 and you want a 40% margin. The selling price is 600 / (1 - 0.40) = 1,000.00. Profit is 400.00, margin is 40%, and the markup you needed was 400 / 600 = 66.67%.
The formulas
- Price from markup:
price = cost × (1 + markup / 100) - Price from margin:
price = cost / (1 - margin / 100) - Profit:
profit = price - cost - Markup:
profit / cost × 100 - Margin:
profit / price × 100 - Converting:
markup = margin / (100 - margin) × 100andmargin = markup / (100 + markup) × 100
A margin must be below 100%. A 100% margin would mean the whole selling price is profit, which is only possible if the cost is zero, so the calculator rejects it.
Common margins at a glance
- 20% margin needs a 25% markup
- 25% margin needs a 33.33% markup
- 30% margin needs a 42.86% markup
- 40% margin needs a 66.67% markup
- 50% margin needs a 100% markup
Limits
- The profit shown is gross profit per unit. Rent, salaries, advertising, returns and marketplace commissions charged on the selling price are not deducted unless you build them into the cost.
- Sales tax is not included. If you must charge tax, add it to the selling price separately.
- The calculator does not know what customers will pay. Check the result against competitor prices and demand.
Tips
- Decide whether your business thinks in margin or markup, and use the same term everywhere, including supplier and staff conversations.
- If a marketplace takes a percentage of the selling price, price by margin: it behaves the same way as the fee.
- Round the final price to a sensible figure after checking that the rounded price still meets your margin.
Frequently Asked Questions
What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. Buying at 800 and selling at 1,000 is a 25% markup but a 20% margin.
What markup do I need for a 30% margin?
A 42.86% markup. The general rule is markup = margin / (100 - margin) x 100. The table under the calculator lists several common margins.
Why can't I enter a 100% margin?
A 100% margin would mean the entire selling price is profit, which requires a cost of zero. Any margin below 100% is accepted.
Does the calculator include tax or platform fees?
No. Add per-unit fees to the cost if they are fixed, or use a margin target if the fee is a percentage of the selling price. Add sales tax on top of the selling price separately.
