Pricing, Margin and Markup Calculator

Margin is profit as a share of the selling price, and markup is profit as a share of the cost. For example, a product that costs $50 and sells for $100 has a 50% margin and a 100% markup. So adding 50% to the cost gives a $75 price, which has a 33.3% margin, not a 50% margin.

To calculate margin, divide the profit by the selling price and multiply by 100, so margin (%) = (selling price − cost) ÷ selling price × 100. For example, if you sell a product that costs $60 for $80, the margin is (80 − 60) ÷ 80 = 25%. In the calculator, use the Profit margin mode.

Markup is the percentage you add to the cost to reach the selling price, so price = cost × (1 + markup). For example, with a $50 cost and a 60% markup, the price is $80 and the multiplier is 1.6. To find the markup of a price, use markup (%) = (price − cost) ÷ cost × 100.

Divide the cost by 1 minus the margin, so price = cost ÷ (1 − margin). For example, with a $60 cost and a 25% margin, the price is 60 ÷ 0.75 = $80. If you multiply the cost by 1.25 instead, the price is $75, and the margin drops to 20%.

Card fees are charged on the selling price, so they go in the divisor and are not added to the cost. The formula becomes price = total cost ÷ (1 − margin − fee). For example, with a $60 cost, a 25% margin and a 3% fee, the price is 60 ÷ 0.72 = $83.33. If you charge $80, the $2.40 fee comes out of your margin.

Taxes you pay as a percentage of sales also go in the divisor, next to the card fee. For example, with a $25 total cost, a 30% margin, a 3% fee and 7% tax, the price is 25 ÷ 0.60 = $41.67.

No. Margin is a part of the price, so it always stays below 100%, and a 100% margin would only be possible with a zero cost. Markup can go above 100%. For example, a 200% markup, where the price is 3 times the cost, equals a 66.7% margin.

Build the discount into the list price. In the calculator, turn on the seasonal discount, and the calculator divides the list price by (1 − discount). The discounted price then still covers your costs, fees and margin. For example, with a 10% discount, a $41.67 price becomes $46.30 on the list.

Use a competitor's price only as a reference, after you calculate your own cost. Every store pays different amounts for products, shipping, rent and fees, so copying another store's price can leave you with a smaller margin than theirs or even a loss. Calculate your price in the calculator first, and if it comes out well above the market, review your costs before you lower your margin.

Treat your time as a cost, the same way you treat materials. Divide what you want to earn each month by the hours you work in a month. For example, $3,000 over 150 hours is $20 an hour, so if one unit takes you 30 minutes to make, add $10 to its cost before you apply your margin.

Review them whenever a supplier raises prices, your card processing fee changes, or your packaging gets more expensive. Even when nothing changes, check your prices every three months. When you change a price, update the price tag, your display and your online catalog on the same day, so customers always see the right price.