Margin in 3 steps
- Profitselling price − cost
- Marginprofit ÷ selling price × 100
- Markupprofit ÷ cost × 100
Price for a target margin = cost ÷ (1 − margin)
Margin and markup formulas
- Profit = selling price − cost
- Margin = profit ÷ selling price × 100
- Markup = profit ÷ cost × 100
- Price for a target margin = cost ÷ (1 − margin)
Margin answers "how much of each 100 I collect is profit", while markup answers "how much did I add on top of cost". The same price tag gives two different percentages, so agree with suppliers and buyers on which one you mean.
Margin to markup conversion
| Margin | Markup | Price when cost is 100 |
|---|---|---|
| 10% | 11.1% | 111.11 |
| 20% | 25% | 125.00 |
| 30% | 42.9% | 142.86 |
| 40% | 66.7% | 166.67 |
| 50% | 100% | 200.00 |
Example: cost 70, selling price 100
Profit is 30. Margin is 30 ÷ 100 = 30% and markup is 30 ÷ 70 = about 42.9%. To aim for a 40% margin instead, the price would be 70 ÷ 0.6 = about 116.67.
Before you set a price
- Include marketplace fees, shipping, packaging and advertising in cost to see the profit you really keep.
- Keep tax out of both numbers, or in both. Discounts cut margin quickly, so check the discounted price with the percentage calculator.
- Results are estimates based only on the numbers you enter.