Markup Calculator

Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A 50% markup is a 33.3% margin — the same money described against different bases.

Margin = markup ÷ (1 + markup), with both as decimals. A 50% markup gives 0.5 ÷ 1.5 = 33.3% margin.

No. Margin is profit as a share of the selling price, so it approaches 100% and never reaches it. Markup has no upper limit at all.

Markup = margin ÷ (1 − margin). For a 40% margin you need a 66.7% markup, which is why pricing on markup while measuring on margin consistently undershoots.

Margin, because it relates directly to the money coming in and to the profit and loss account. Markup is easier to apply at the point of pricing, which is why both persist.

Doubling the cost — a 100% markup, which is a 50% margin. It is a traditional retail rule of thumb and it survives because the arithmetic is trivial.

It varies enormously by sector — grocery retail runs on very thin margins and software on very fat ones. The comparison worth making is against your own sector rather than in the abstract.

Revenue less variable costs, which is what each sale contributes towards fixed costs and profit. It is the figure that determines break-even, not gross margin.

Fixed costs spread over more units, so unit cost falls with volume. That is why a price that loses money at low volume can be profitable at high volume.

Setting price as cost plus a target markup. It is simple and it ignores what customers will pay, which is why value-based pricing frequently produces a better result.

Disproportionately. On a 30% margin, a 10% discount removes a third of the profit — the discount comes entirely out of margin rather than out of cost.

For margin on a product, include the direct labour that varies with production. Overhead labour belongs in fixed costs, which is what break-even analysis handles separately.