Calculator comparison
Markup vs Margin Calculator
Calculate markup and gross margin from the same cost and selling price. The profit dollars match, but the percentage denominators differ.
Updated 16 October 2026 • Tools by Layna Editorial Team • General information
Margin divides by price; markup divides by cost
With direct cost C and selling price P, the amount left before any unentered expenses is P − C. Gross margin = (P − C) ÷ P × 100. Markup = (P − C) ÷ C × 100. The difference is the denominator, not a different profit amount.
The calculator above uses those relationships. Its optional target-margin input finds the selling price required for that gross margin: cost ÷ (1 − target margin as a decimal). It does not calculate net business profit or automatically include GST, payment fees, postage and overhead.
Worked example using the calculator’s starting values
| Item | Calculation | Result |
|---|---|---|
| Direct cost | Entered cost | $60 |
| Selling price | Entered price | $100 |
| Amount left | 100 − 60 | $40 |
| Gross margin | 40 ÷ 100 × 100 | 40% |
| Markup | 40 ÷ 60 × 100 | 66.7% |
| Price for a 40% target margin | 60 ÷ (1 − 0.40) | $100 |
A 40% markup on $60 would instead produce a price of $84 and a margin of $24 ÷ $84 × 100 = 28.6%. Setting markup equal to a desired margin would therefore underprice this example.
Convert between percentages without changing the cost
For non-negative profit and positive cost/price, margin as a decimal = markup ÷ (1 + markup). Markup as a decimal = margin ÷ (1 − margin). A 50% markup corresponds to a 33.3% margin; a 50% margin requires a 100% markup.
Percentages need their bases stated. “We make 40%” is ambiguous until you say whether 40% is measured against revenue or cost.
Make the cost basis explicit
Use cost and price on the same GST basis. An unentered expense is not included just because the output says profit. If landed product cost is $60 and a separate $5 fulfilment charge applies, a $100 sale leaves $35 before other expenses, not $40.
The calculator shows N/A where a denominator is zero: markup at zero cost and margin at zero selling price are undefined. Profit dollars can still be displayed. The target-price solver requires positive cost; at zero cost, a positive price produces 100% margin rather than the selected lower target.
A target margin must be below 100%. The 99.9% input ceiling avoids division by zero; it does not mean such a target is realistic or suitable.
Use the relevant calculator
Frequently asked questions
Is 50% markup the same as 50% margin?
No. A $100 cost with 50% markup sells for $150, leaving $50. Its margin is $50 ÷ $150, or 33.3%.
Does the displayed profit equal net profit?
No. It is selling price minus the cost entered. Other expenses, fees and tax treatment are not added automatically.
Why does the price rise sharply as target margin approaches 100%?
Price is cost divided by 1 minus the margin. That denominator approaches zero, so the required price grows rapidly for positive cost.
Sources and method
The worked figures are illustrative arithmetic. The references below explain the underlying definitions and limits.