Pricing notebook

Profit margin and markup

Enter a cost and a selling price, or start from the margin or markup you want.

Margin and markup workspace

The currency changes the symbol only. Amounts are not converted. A percentage target is before taxes and costs you leave blank.

Use digits and a period for the decimal point. A blank optional cost counts as zero. Labor is hours times the hourly cost, once.

Selling price is required for profit, margin, and markup. Choose Find a price to solve a target instead.

Discount and variable costs
Cost scope

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Margin uses revenue; markup uses cost

Profit is selling price minus the cost scope you chose. Margin divides that profit by revenue. Markup divides the same profit by cost. A 50% markup on a $100 cost is a $150 price and a 33.33% margin.

Gross profit here means the product cost is the only cost in the subtraction. Contribution profit means the variable costs you opened, including labor hours times the hourly cost, are included once. Neither result is business net profit unless you have entered every overhead and tax cost that belongs in the question.

Helpful guides

Margin and markup use different denominators

A $40 cost and a $100 price leave $60 profit: 60% margin and 150% markup.

Find a price from a target margin or markup

A $1 cost and a 30% margin target recommend $1.43 after rounding up.

How a discount changes profit and margin

An $80 cost, $100 price, and 25% discount leave $75 revenue and a −6.67% margin.

Common questions

Does 50% markup mean 50% margin?

No. A cost of $100 with 50% markup gives a $150 price and a 33.33% margin.

What happens when revenue is zero?

Margin is undefined because its denominator is revenue. Profit can still be shown, including a loss.

What costs should I include?

Product cost alone gives gross profit. Adding variable selling costs gives contribution profit. Business net profit also needs the overhead and other expenses that apply.

Can I calculate a target price?

Yes. Enter a cost above zero and a margin target under 100%, or a markup target of zero or more. The recommended price rounds up to the next cent.

Will a discount change the margin?

Yes. A $80 cost, $100 price, and 25% discount leaves $75 of revenue, −$5 profit, and a −6.67% margin.