Margin vs Markup Calculator
Margin and markup are easy to confuse and the difference matters when you're setting prices. This calculator converts between the two, calculates the selling price needed to hit a target margin, and shows the gross profit per unit — useful for retailers, wholesalers, restaurant operators, and anyone running a side hustle on Etsy, Amazon, or Shopify.
How is this calculated?
Markup is profit as a percentage of cost: markup = (price − cost) / cost × 100. Margin is profit as a percentage of selling price: margin = (price − cost) / price × 100. Given any two of cost, price, margin, or markup, the calculator solves for the others. To hit a target margin of m% on cost C, the selling price is C / (1 − m/100). State sales tax is excluded — these calculations use the net figures used in your bookkeeping and tax returns.
Frequently Asked Questions
Why isn't a 50% markup the same as a 50% margin?
Different denominators. Cost $50, sell at $75: markup is $25/$50 = 50%; margin is $25/$75 = 33.3%. To produce a 50% margin you need a 100% markup. Mixing the two up is one of the most common pricing errors in small businesses, and it tends to favor the customer rather than your bottom line.
What's a healthy gross margin?
It depends entirely on the sector. U.S. supermarkets run on 25%–30% gross margin, restaurants typically 65%–70% on food and 75%+ on beverages, fashion retail 50%–60%, and SaaS often 75%+. Compare yourself against your sector benchmarks rather than a generic target — what looks low for software is enviable in groceries.
Should I price for margin or markup?
Price for margin if you have fixed overhead to cover — margin tells you what proportion of each sale is available to absorb it. Price for markup if you're trying to maintain a consistent multiple over a fluctuating cost base, common in import-heavy categories where supplier prices move month to month.
How does sales tax fit in?
Margin and markup are calculated on net figures (excluding sales tax). Sales tax is collected from the customer and remitted to the state, so it never touches your profit line. State and local sales tax rates vary widely; the IRS provides federal guidance but sales tax is administered at the state level.
Last updated: May 2026 · Rates sourced from IRS