A 50% markup is a 33% margin
These two numbers describe the same sale and are routinely confused, which is how businesses end up pricing themselves into losses. Markup measures profit against your cost. Margin measures it against your selling price. Since the selling price is always the larger of the two, margin is always the smaller percentage.
Buy at $40, apply a 50% markup, sell at $60. The $20 profit is half your cost — a 50% markup — but only a third of the sale — a 33.3% margin. If you set prices by markup while planning your business around margin, every product is less profitable than your spreadsheet believes.
To convert between them: margin = markup ÷ (1 + markup), using decimals. A 100% markup is a 50% margin; a 200% markup is a 66.7% margin. Margin can approach 100% but never reach it, because the cost never disappears from the price.
Setting a price
Enter your cost and the markup percentage you want to apply. The calculator returns the selling price, the profit in currency, and the resulting profit margin. Because it shows both markup and margin, you can price an item and immediately see how much of the sale is actually profit. Everything runs in your browser.
Pricing with confidence
Good pricing starts with knowing your true cost and the profit you need after overheads. From there you can test markup percentages and watch the selling price and margin respond in real time. That makes it easy to find a price that is competitive yet still leaves the margin your business needs. For working out discounts on the finished price, pair this with our discount calculator. Nothing you enter is stored.
Pricing from the margin you need
Most businesses know the margin their overheads require before they know what to charge. Working in that direction, price = cost ÷ (1 − margin). If a product costs $40 and you need a 40% margin, the price is 40 ÷ 0.60 = $66.67 — not $56, which is what applying a 40% markup would have given you.