About the Margin Calculator
This margin calculator helps you price products and check profitability for an online store, Amazon or Etsy shop, wholesale business or restaurant. A โ30% marginโ and a โ30% markupโ are very different numbers: margin is profit as a share of the selling price, markup is profit as a share of cost. Mixing them up is one of the most common pricing mistakes, so the calculator always shows both, plus a table of prices for common margins.
How to use
- Choose a mode: Margin uses cost and selling price; Price from margin and Price from markup calculate the price from cost and a target percentage.
- Enter the cost (what you pay per unit, including landed costs) and the price or target percentage, all before sales tax.
- Tick Add sales tax and enter your combined state and local rate to see the price the customer pays.
- Use the table to compare prices and profit at margins from 10% to 60%.
Margin and markup formulas
| Value | Formula | Example (cost $35, price $50) |
|---|---|---|
| Profit | price โ cost | $15 |
| Gross margin | profit รท price ร 100 | 30% |
| Markup | profit รท cost ร 100 | 42.86% |
| Price from margin m | cost รท (1 โ m) | 40% โ $58.33 |
| Price from markup k | cost ร (1 + k) | 50% โ $52.50 |
Common mistake: adding 40% to a $35 cost ($49) gives a margin of only 28.6%, not 40%.
Margin to markup conversion
| Margin | Markup |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
Markup = margin รท (1 โ margin); margin = markup รท (1 + markup).
Sales tax and other costs
US sales tax is collected from the customer and passed on to the state, so it is not part of your revenue or margin โ always calculate margin on the pre-tax price. Rates depend on the state, county and city. Also account for marketplace and payment fees (often 3โ15% of revenue), shipping, returns and advertising, either by adding them to cost or by targeting a higher margin.
FAQ
What is the difference between margin and markup?
Margin is profit divided by the selling price; markup is profit divided by cost. The same sale always has a higher markup than margin โ for example, cost $35 and price $50 is a 42.9% markup but a 30% margin.
Can a margin be more than 100%?
No. Because margin is a share of the price, it can never reach 100% unless the cost is zero. Markup has no upper limit: selling at three times cost is a 200% markup and a 66.7% margin.
What is a good profit margin?
It depends on the industry. Grocery stores often run gross margins of 25โ30%, apparel and cosmetics 50% or more, and software even higher. Compare with businesses like yours and remember that operating costs still come out of the gross margin.
Is this gross margin or net margin?
Gross margin: it only subtracts the cost of the product. Net margin also subtracts overhead such as rent, salaries and taxes.