Markup versus margin

Markup and margin start from the same dollar difference: selling price minus cost. They part ways on the denominator. Markup divides that difference by cost. Margin divides the same difference by selling price. The markup calculator shows both percents when you enter cost and selling price.

Suppose cost is $80 and you want a 25 percent markup. Selling price = 80 × (1 + 25 ÷ 100) = $100. Markup = (100 − 80) ÷ 80 = 25 percent. Margin = (100 − 80) ÷ 100 = 20 percent. The 25 percent and the 20 percent are both correct, and they are not interchangeable.

If the target is a 25 percent margin on that same $80 cost, the selling price is 80 ÷ (1 − 25 ÷ 100) = $106.67 after half-up rounding to the cent. That is not $100. Pasting a margin percent into a markup formula underprices the item.

A cost of zero cannot produce markup, because markup divides by cost. A margin of 100 percent cannot produce a selling price, because 1 − 1 is zero. The calculator reports those cases next to the field.

This page is about pricing from cost and sell. It is not a discount off a list price, and it is not a payroll burden. For a percent off, use the discount calculator.