Break-Even Calculator
How many units — and how much revenue — before you stop losing money.
Margin & Markup Calculator
This margin markup calculator works from a target margin, a target markup, or a known selling price, and shows all three every time.
Both directionsShows margin and markupAny currencyFree, no sign-up
Margin and markup are not the same thing
They measure the same profit against different bases, which is exactly why they get confused.
- Margin is profit as a percentage of the selling price.
- Markup is profit as a percentage of the cost.
Take a product costing 100 sold for 150. The profit is 50 either way. But:
- Margin = 50 ÷ 150 = 33.3%
- Markup = 50 ÷ 100 = 50%
Same transaction, two very different-looking percentages.
The expensive mistake
A business decides it needs a 40% margin. Someone applies 40% to cost instead — 100 becomes 140. The actual margin achieved is 40 ÷ 140 = 28.6%, not 40%.
That is 11.4 percentage points of margin lost on every sale, invisibly, until someone works out why the year came in below plan. On a business turning over 5 million, that is a large number to lose to an arithmetic convention.
The formulas
- Price from margin: Price = Cost ÷ (1 − margin%)
- Price from markup: Price = Cost × (1 + markup%)
- Margin from markup: Margin = Markup ÷ (1 + Markup)
- Markup from margin: Markup = Margin ÷ (1 − Margin)
Quick reference
Worth memorising the common pairs:
- 20% markup = 16.7% margin
- 25% markup = 20% margin
- 33.3% markup = 25% margin
- 50% markup = 33.3% margin
- 100% markup = 50% margin
Note that margin can approach 100% but never reach it — a 100% margin would mean the item cost nothing. Markup has no upper limit. The calculator says so rather than returning an impossible price.
Which should you use?
Use margin for reporting and for any conversation about profitability, because it relates to revenue and reconciles to your accounts. Use markup for pricing, because you start from cost and need to get to a price.
The critical thing is that everyone in the business knows which one they are talking about. Most pricing errors we see are not disagreements about strategy — they are two people using the same word for different things.
Before you rely on the margin markup calculator result
The arithmetic here is exact and has been checked against worked examples. What a calculator cannot do is know your situation — your contract, your licence category, the elections available to you, or the exceptions that might apply. It applies a formula to the figures you give it.
Use it to get a sense of scale, to sanity-check something you have been quoted, or to work a problem through for yourself. Where the number is going into a decision that matters, have the assumptions underneath it checked. That conversation is free and it usually takes twenty minutes.
Business Finance
Margin & markup — common questions
The questions we are asked most about this calculation.
Something not covered? Ask us directly — there is no charge for a straight answer.
Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. An item costing 100 and selling for 150 has a 33.3% margin and a 50% markup. Same profit, different base, very different-looking numbers.
Divide the cost by one minus the margin expressed as a decimal. For a 40% margin on a cost of 100: 100 ÷ 0.6 = 166.67. Do not add 40% to cost — that gives a markup, not a margin, and produces a 28.6% margin instead.
No. Margin is profit as a share of the selling price, so it can approach 100% but never reach or exceed it — that would require the item to cost nothing or less. Markup has no upper limit and can be several hundred per cent.
Markup is the natural tool for pricing because you start from a known cost and work up to a price. Margin is the right measure for reporting and profitability discussions because it relates to revenue and ties back to your accounts. Problems arise when the two get mixed within one conversation.
It varies enormously by sector. Grocery retail runs on very thin margins with high volume; professional services and software run on much higher margins with lower volume. The useful comparison is against others in your own sector and against your own prior year, not against a general benchmark.
Want the assumptions checked by a chartered accountant?
Send us what the calculator gave you and we will tell you whether the figures underneath it hold up. Free, and genuinely no obligation.