Business tool
Profit Margin and Markup Calculator
Convert between cost, price, margin and markup, then find your break-even units and revenue. Set a profit target and see how many sales you need.
Free, no sign-up. Runs in your browser; nothing is uploaded.
Margin and markup
Margin is profit divided by the selling price. Markup is profit divided by cost. A 50% markup is only a 33.3% margin.
Break-even
How to use the profit margin and markup calculator
Price with confidence
Two numbers get mixed up in almost every pricing conversation: margin and markup. This calculator keeps them straight and shows both for any combination of inputs.
Margin and markup
- Choose what you already know: cost and price, cost and a target margin, cost and a markup, or price and a margin.
- Enter the two values and pick your currency.
- Read off the cost, selling price, profit, gross margin and markup together.
Remember the rule of thumb: markup is always larger than margin for the same deal. A 25% markup is a 20% margin, and a 100% markup is only a 50% margin. If your finance team talks about margin and your sales team talks about markup, agree which one you quote before you set prices.
Break-even
The second panel answers a different question: how much do I have to sell before I make money?
- Fixed costs are what you pay for the period whether you sell or not.
- Price per unit and variable cost per unit give the contribution each sale adds.
- The tool returns break-even units, the revenue at that point and the contribution margin.
- Add a profit target to see the units and revenue you need to reach it.
Units are rounded up because you cannot sell part of an item.
Tips
- Include payment fees, returns and shipping in variable cost, or your margin will be flattering.
- If the price is not higher than the variable cost, no volume will ever break even. Raise the price or cut the cost.
- Re-run the numbers when a supplier changes a price.
These are planning estimates and do not replace advice from an accountant.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. For a product that costs 60 and sells for 100, profit is 40, margin is 40% and markup is 66.7%.
How do I price a product for a target margin?
Divide the cost by one minus the margin. For a 40% margin on a cost of 60, the price is 60 / 0.6 = 100. Choose "Cost + margin" and the tool does this for you.
What is break-even?
It is the number of units where total contribution equals your fixed costs. Break-even units = fixed costs / (price - variable cost per unit). Selling more than that makes a profit.
What goes into fixed and variable costs?
Fixed costs stay the same whatever you sell, such as rent, salaries and software. Variable costs rise with each unit, such as materials, packaging, payment fees and shipping.
Is gross margin the same as net margin?
No. Gross margin only subtracts the direct cost of the goods. Net margin also subtracts overheads, interest and tax. Use the break-even panel to bring fixed costs into the picture.