Markup Calculator

Markup is the amount added to cost, expressed as a percentage of cost: (price minus cost) divided by cost. Margin expresses the same profit as a percentage of price. Same money, different denominator — and confusing the two is one of the most expensive routine errors in small business pricing.

The gap widens as profitability rises. A 50% markup is a 33% margin. A 100% markup is a 50% margin. A 25% markup is a 20% margin. A business that wants a 40% margin and applies a 40% markup will land well short of its target on every single sale, and because the error is proportional it scales silently with volume.

Converting between them is straightforward. Margin equals markup divided by (1 plus markup). Markup equals margin divided by (1 minus margin). Deciding which to use is mostly a question of who you are talking to: buyers, suppliers, and anyone working from cost sheets tend to think in markup, because they start from what they paid. Finance, investors, and anyone reading an income statement think in margin, because revenue is the top line.

Set markup from a target margin rather than by habit. Work out the margin the business needs to cover operating expenses and produce a return, then convert to the markup that delivers it. Applying a customary markup percentage without checking what margin it implies is how businesses end up busy and unprofitable — and the discrepancy is invisible until the year-end accounts arrive. Everything runs in your browser — no login, no upload, and no figure you enter leaves the page.