Margin vs Markup Calculator
Convert between margin and markup, and find the price for a target margin.
A 50% markup is not a 50% margin — it is a 33.3% margin. Confusing the two is one of the most expensive arithmetic mistakes in small business, and it always errs in the same direction: you charge less than you meant to. This calculator converts between them and prices from either.
What do you know?
Result
Fill in the fields above and your result will appear here.
What the Margin vs Markup Calculator does
Both describe profit, but against different bases. Markup measures profit against what you paid; margin measures it against what you charged. Since the selling price is always larger than the cost, the margin percentage is always smaller than the markup percentage.
The gap widens as profit increases. A 25% markup is a 20% margin — close enough to be forgiven. A 100% markup is a 50% margin, and a 200% markup is a 66.7% margin. At the higher end, treating them as interchangeable badly misprices a product.
How to use this tool
- Choose what you already know: cost and target margin, cost and markup, or cost and selling price.
- Enter the cost price — what you actually pay, excluding GST if you claim input tax credit.
- Enter the margin, markup or selling price depending on the mode you selected.
- Add a GST rate if you want the final price a customer would pay.
- Use the conversion table to see what markup delivers each common margin at your cost.
Formula and method
Margin % = (Price − Cost) ÷ Price × 100
Markup % = (Price − Cost) ÷ Cost × 100
Price from margin: Price = Cost ÷ (1 − Margin ÷ 100)
Price from markup: Price = Cost × (1 + Markup ÷ 100)
Converting between them:
Markup = Margin ÷ (100 − Margin) × 100
Margin = Markup ÷ (100 + Markup) × 100
Worked example
Example: ₹400 cost, targeting a 35% margin
| Selling price (400 ÷ 0.65) | ₹615.38 |
| Profit | ₹215.38 |
| Margin | 35.0% |
| Equivalent markup | 53.8% |
Applying a 35% markup instead would give ₹540 and a margin of only 25.9% — nearly ₹75 per unit less than intended.
What your result means
Margin is the figure to use for business decisions. It tells you what share of each rupee of revenue you keep, and it is directly comparable to your cost ratios.
Markup is the figure to use when pricing from cost. It is the multiplier you apply at the point of setting a price.
The conversion table is worth keeping. Most pricing errors come from someone saying "add 30%" without specifying to what.
Important considerations
- Suppliers and distributors usually quote in markup; accountants and investors work in margin. Confirm which is meant before agreeing a number.
- Margin should be calculated on GST-exclusive amounts. Including GST in either the cost or the price inflates the apparent margin.
- Gross margin covers only direct cost. Rent, salaries and overheads come out of it — a 35% gross margin does not mean 35% profit.
- Discounting reduces margin far faster than it reduces price. See the discount profit calculator.
- For imported goods, include customs duty, freight and clearing in the cost price. Landed cost, not invoice cost, is what you should mark up.
Limitations of this tool
- It works on a single unit with a single cost. Blended margins across a product range need a weighted calculation.
- It computes gross margin only, and does not allocate overheads, wastage or shrinkage.
- GST is applied as a simple addition and does not model input tax credit or reverse charge.
Frequently asked questions
What is the difference between margin and markup?
Markup is profit as a percentage of cost; margin is profit as a percentage of selling price. Buy at ₹100 and sell at ₹150 and you have a 50% markup but a 33.3% margin.
What markup gives a 50% margin?
A 100% markup — you double the cost. The formula is markup = margin ÷ (100 − margin) × 100.
Should I calculate margin before or after GST?
Before. GST is collected on behalf of the government and was never your revenue. Including it overstates both revenue and margin.
Is a 35% margin good?
It depends on the sector and on what your overheads consume. Retail commonly runs 20–40% gross margin, services considerably higher. The real test is whether gross margin covers fixed costs at your achievable volume — the break-even calculator answers that.