— Everyday Math
Margin Percentage Calculator
Margin is profit measured against the selling price — the share of each sale you keep as gross profit. Enter the cost and either the price or a target margin, and the calculator solves for the rest: the margin percentage, the profit, and the equivalent markup.
Margin
20%
- Profit per unit
- $20
- Equivalent markup
- 25%
— How it works
Margin % = (selling price − cost) ÷ selling price × 100. Selling price = cost ÷ (1 − margin% ÷ 100). The equivalent markup = margin ÷ (1 − margin) — the same profit measured against cost instead of price.
Margin is profit over price
Gross margin answers a profitability question: of every dollar of revenue, how much is gross profit? It is the profit as a percentage of the selling price — sell for 100 something that cost 80, and the 20 of profit is a 20% margin, because 20 is a fifth of the 100 you took in. In business terms it is (revenue − cost of goods sold) ÷ revenue. The defining feature is the denominator: margin always divides profit by the selling price, which is what separates it from markup.
Worked example — costs $80, sells for $100: Profit = $100 − $80 = $20. Margin = $20 ÷ $100 = 20%, while the equivalent markup = $20 ÷ $80 = 25%.
Margin vs markup — the cross-reference that trips people up
Margin and markup describe the same profit but divide it by different things: margin by the selling price, markup by the cost. Because the price is always larger than the cost, the margin is always the smaller number — a 20% margin is a 25% markup, a 33.3% margin is a 50% markup, and a 50% margin is a 100% markup. Mixing them up is one of the most expensive mistakes in pricing: a shop that wants a 30% margin but applies a 30% markup ends up with only a 23% margin and quietly loses money on every sale. This calculator shows both for every result, converting with markup = margin ÷ (1 − margin).
Margin also has a hard ceiling that markup does not: it can approach but never reach 100%, because profit can never exceed the price it is measured against. Markup, dividing by the smaller cost, has no upper limit.
Pricing to a target margin
Most businesses set prices to hit a target margin rather than working out the margin after the fact. That means dividing — not multiplying: to make a 20% margin on an item that costs 80, the price is 80 ÷ (1 − 0.20) = 80 ÷ 0.80 = 100. Dividing by one minus the margin is the step people most often get wrong, reaching for cost × 1.20 (a markup) instead. Switch to “Selling price” mode, enter the cost and your target margin, and the calculator prices it correctly. The selling price cannot be zero when solving for margin, and the margin must stay below 100%.
— Reader questions
How do I calculate profit margin?
Subtract the cost from the selling price to get the profit, divide by the selling price, and multiply by 100. Selling at $100 something that cost $80 gives ($100 − $80) ÷ $100 × 100 = 20% margin. Enter cost and price in margin mode and the calculator does it instantly.
What is the difference between margin and markup?
Both measure the same profit, but margin divides it by the selling price while markup divides it by the cost. Since the price exceeds the cost, the margin is always the smaller number — a 20% margin equals a 25% markup. This calculator shows the equivalent markup for every result.
How do I price something to hit a target margin?
Divide the cost by one minus the margin as a decimal. For a 20% margin on a $80 cost: $80 ÷ (1 − 0.20) = $80 ÷ 0.80 = $100. Use “Selling price” mode — and note this is division, not the cost × 1.20 multiplication people often mistake it for.
How do I convert a margin to a markup?
Divide the margin by one minus the margin: markup = margin ÷ (1 − margin). A 50% margin is 0.5 ÷ 0.5 = 100% markup. To go the other way, margin = markup ÷ (1 + markup).
Can a margin be more than 100%?
No. Margin is profit ÷ selling price, and profit can never exceed the price it is part of, so margin approaches but never reaches 100%. Markup has no such ceiling because it divides by the smaller cost. The calculator requires a margin below 100% when pricing.