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Margin and markup both describe the same profit, but as different percentages — and mixing them up is one of the most common pricing mistakes small businesses make. This calculator takes a cost price and selling price and reports the profit amount, the margin (profit as a percentage of the selling price), and the markup (profit as a percentage of the cost price) — all three, side by side, so the difference is immediately clear rather than a source of confusion.
How it works
Enter what an item costs you and what you sell it for. The calculator subtracts cost from selling price to get the profit amount, then reports that profit as a percentage of the selling price (margin) and, separately, as a percentage of the cost price (markup). If the selling price is lower than the cost, it's reported clearly as a loss rather than a negative percentage that's easy to misread.
- Enter the cost price and selling price.
- Review the profit amount, margin and markup side by side.
Examples
The same profit, two different percentages
An item costing $50 sold for $100 makes $50 profit — a 50% margin (profit ÷ selling price) but a 100% markup (profit ÷ cost price). Same dollar profit, very different-looking percentages depending on which one you quote.
Selling at a loss
An item costing $120 sold for $100 during a clearance loses $20 — reported clearly as a loss rather than an easily misread "-20% margin."
Who should use it
- Deciding what to charge for a product given its cost.
- Checking the actual margin behind an existing selling price.
- Comparing margin vs. markup when discussing pricing with a colleague or client.
- Sanity-checking a clearance or discounted price against the original cost.
Industry applications
- Retail and e-commerce
- Manufacturing and product costing
- Wholesale and distribution
- Freelance and service pricing
Advantages
- Reports both margin and markup from the same inputs, avoiding the common mix-up between them.
- Clearly labels a negative result as a loss instead of an easily misread percentage.
- Simple, direct calculation with no unnecessary inputs.
Limitations
- Doesn't account for multiple cost components separately (materials, labor, overhead) — expects one combined cost figure.
- Single-item calculation only, not a bulk/multi-product analysis.
Common mistakes to avoid
- Using "margin" and "markup" interchangeably when they're calculated differently and give different percentages.
- Setting a price based on a markup percentage while believing it delivers that same percentage as margin.
- Forgetting to include all real costs (not just materials, but overhead, shipping, fees) when calculating true cost price.
Best practices
- Be explicit about which figure — margin or markup — you're quoting, especially when discussing pricing with others.
- Include all real costs, not just the most obvious one, when calculating an accurate cost price.
- Use markup when pricing from a known cost, and margin when targeting a specific percentage of revenue.
Tips
- When comparing pricing strategies with someone else, confirm up front whether they mean margin or markup — the same number means very different things.
- Recalculate margin whenever your cost price changes, since a shrinking margin at a fixed selling price often creeps up unnoticed.