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Margin vs Markup Calculator
Calculate profit margin and markup percentages. Understand the key difference to price your products correctly.
Calculate Margin & Markup
What's the Difference?
Margin and markup are both measures of profitability, but they’re calculated differently and often confused. Using the wrong one can lead to pricing mistakes that eat into your profits.
| ASPECT | MARGIN | MARKUP |
|---|---|---|
| Based on | Selling Price | Cost Price |
| Formula | (Price - Cost) / Price |
(Price - Cost) / Cost |
| Example: $50 cost, $80 price |
37.5% | 60% |
| Used for | Financial analysis | Pricing decisions |
The Formulas
Margin % = (Selling Price - Cost) / Selling Price × 100
Markup % = (Selling Price - Cost) / Cost × 100
Selling Price = Cost / (1 - Margin%)
Example Calculation
Scenario: Product Pricing
Cost (COGS): $50
Selling Price: $80
Profit: $30
Margin: $30 / $80 = 37.5%
Markup: $30 / $50 = 60%
Notice: Same profit, different percentages! This is why understanding the difference matters.
Why This Matters
Avoid Pricing Mistakes: If you aim for a 40% margin but use markup math, you’ll underprice and lose profit.
Better Financial Planning: Margin is what shows up on P&L statements, not markup.
Platform Fee Calculations: Amazon, Shopify, and payment processors take percentages of selling price (margin-based), not cost.
Investor Communication: Investors and acquirers think in margins, not markup.
Common Mistake to Avoid
The 50% Markup Trap
Many sellers think: “My cost is $50, I’ll add 50% markup = $75 price.”
But 50% markup ≠ 50% margin!
At $75 price:
Markup = 50% ✓
Margin = ($75-$50)/$75 = 33.3% ✗
To get 50% margin: Price = $50 / (1-0.5) = $100
Quick Reference: Margin ↔ Markup
| MARGIN % | MARKUP % |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 33.3% | 50% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
| 70% | 233% |
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