Markup Calculator
Markup Calculator
Find the selling price that gives the margin — or the markup — you want on a cost, and see the other percentage alongside, so a target margin is never priced as a markup by mistake.
Selling price
Cost $700, target margin 30%
Price from a margin or a markup
- cost
- the cost of one item
- m
- the target margin, as a percentage of the selling price
- k
- the target markup, as a percentage of cost
Worked example
Cost $700, target margin 30%
Price = 700 ÷ (1 − 0.30) = 700 ÷ 0.70 = $1,000.00
Profit = 1,000 − 700 = $300, which is 30% of the price and a 42.86% markup on cost
Adding 30% to cost instead: 700 × 1.30 = $910, a margin of only 23.08%
A $700 cost, priced for a margin versus marked up by the same %
| Target | Price for that margin | Cost + that % | Margin you actually get |
|---|---|---|---|
| 10% | $777.78 | $770.00 | 9.09% |
| 20% | $875.00 | $840.00 | 16.67% |
| 30% | $1,000.00 | $910.00 | 23.08% |
| 40% | $1,166.67 | $980.00 | 28.57% |
| 50% | $1,400.00 | $1,050.00 | 33.33% |
Why “add 30% to cost” does not give a 30% margin
A margin is measured on the selling price, but adding a percentage to cost measures it on the cost. The two bases differ, so the same percentage gives different answers. For a $700 cost and a 30% margin target, the price has to be $1,000: the $300 profit is 30% of $1,000. Adding 30% to cost gives $910.0, and a $210.0 profit on $910.0 is a margin of 23.08% — $90 less on every item.
The fix is to divide rather than multiply: price = cost ÷ (1 − margin). If your supplier, franchise agreement or business plan states a margin, price with the first option above; if it states a markup or a cost-plus percentage, use the second. The result shows the price as the other percentage too, so you can check you are speaking the same language as whoever set the target. The profit margin calculator goes the other way, from a price you already charge.
The cost you enter should be the full cost of the item: purchase price, freight in, packaging and any platform or payment fee charged per sale. Overheads that do not change with each sale — rent, salaries, software — belong in a break-even calculator, which shows how many sales at this price cover them. Keep GST or VAT out of the cost if you can claim it back, and add it on top of the price at the end. This is arithmetic on the figures you enter, not financial advice.
Frequently asked questions
How do I price for a 30% margin?
Divide the cost by 0.70. A $700 cost becomes $1,000, giving a $300 profit that is 30% of the price.
What markup gives a 30% margin?
About 42.86%. In general, markup = margin ÷ (100 − margin) × 100.
Why is my margin lower than the markup I added?
Because margin is measured on the higher selling price. A 30% markup gives a 23.08% margin.
Can a margin be 100% or more?
No. A 100% margin would mean the item cost nothing. Markups, measured on cost, can be any size: a 200% markup is a margin of about 66.67%.
Related calculators
References
- Garrison RH, Noreen EW, Brewer PC. Managerial Accounting. McGraw-Hill. Gross margin, contribution margin and cost-plus pricing (markup on cost).
- Horngren CT, Datar SM, Rajan MV. Cost Accounting: A Managerial Emphasis. Pearson. Chapter on cost–volume–profit analysis: contribution margin, break-even point and target operating income.