Profit margin and markup calculator

What the result means

Margin is profit as a share of selling price. Markup is profit as a share of cost. They are not interchangeable.

How it is calculated

Margin % = (price − cost) / price × 100. Markup % = (price − cost) / cost × 100

• Cost: What you paid, excluding GST if you recover GST — keep the same tax basis on both sides.
• Price: What the customer pays, on the same GST basis.

From-markup multiplies cost by 1 + markup. From-margin divides cost by 1 − margin.

Worked example

Cost $80, price $100

A retailer buys for $80 and sells for $100.

Profit

$20

Margin

20%

Markup

25%

If you need a 20% margin, you must mark up 25% — not 20%.

The classic mix-up

Cost $80, price $100: profit $20. Margin is 20% of $100. Markup is 25% of $80. Pricing “plus 25%” is not a 25% margin.

To hit a target margin, divide cost by (1 − margin). A 30% margin on $100 cost is a $142.86 price, not $130. Work in GST-exclusive dollars on both sides so the tax you collect is not counted as profit. The markup-versus-margin guide walks through the conversion both ways.

Questions