How to calculate margin and markup
| You want | Formula | Example (cost $60, price $100) |
|---|---|---|
| Profit margin | (Price − Cost) ÷ Price | $40 ÷ $100 = 40% |
| Markup | (Price − Cost) ÷ Cost | $40 ÷ $60 = 66.7% |
| Price for a target margin | Cost ÷ (1 − Margin) | $60 ÷ (1 − 0.40) = $100 |
| Price for a markup | Cost × (1 + Markup) | $60 × 1.667 = $100 |
| Maximum cost for a margin | Price × (1 − Margin) | $100 × 0.60 = $60 |
| Margin from markup | Markup ÷ (1 + Markup) | 0.667 ÷ 1.667 = 40% |
| Markup from margin | Margin ÷ (1 − Margin) | 0.40 ÷ 0.60 = 66.7% |
The most common pricing mistake
Adding your target margin to cost gives a lower margin than you think. To earn a 30% margin on a $70 item, the price is $70 ÷ 0.70 = $100. Adding 30% to cost gives $91, which is only a 23.1% margin, so you'd lose $9 on every sale compared with your plan.
Include fees in your price
Card processors and marketplaces take a percentage of the price, not the cost. With a 2.9% card fee, a $100 sale leaves you $97.10, so a 40% margin before fees is 37.1% after them. To hit a margin after fees, use: Price = (Cost + other costs) ÷ (1 − Margin − Fee %). The calculator does this when you open "Fees, extra costs and quantity".
More detail: margin vs markup, explained with examples.
Questions
How do I calculate profit margin?
Profit margin = (selling price − cost) ÷ selling price × 100. An item that costs $60 and sells for $100 has a 40% margin.
How do I calculate markup?
Markup = (selling price − cost) ÷ cost × 100. An item that costs $60 and sells for $100 has a 66.7% markup.
What price gives me a 30% margin?
Price = cost ÷ (1 − 0.30). For a $70 cost, the price is $100. Adding 30% to cost ($91) gives only a 23.1% margin.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup is a 33.3% margin; a 100% markup is a 50% margin.
Should fees be included in margin?
For pricing decisions, yes. Card processing and marketplace fees are taken as a percentage of the price, so a 30% margin before a 3% fee is about 27% after it. The calculator shows both.
Can margin be more than 100%?
No. Margin is profit divided by price, so it can't reach 100% unless the cost is zero. Markup has no upper limit: selling a $10 item for $50 is a 400% markup and an 80% margin.
Does margin include VAT or sales tax?
No. Margin is worked out on the price without VAT, GST or sales tax, because that tax isn't your money. Use the VAT/GST margin calculator if your prices include tax.
Last reviewed 28 September 2026.