Profit margin vs markup: calculate both from cost and selling price

Start with two comparable amounts

The calculator accepts cost and selling price for the same item or quantity. Use the same currency and a consistent treatment of any amounts included in those fields. If cost is for a pack of ten but price is for one item, the results answer the wrong question. Decide what your entered cost includes before calculating. The tool does not automatically add delivery, labour, payment fees or overhead. A difference between the two entered amounts is not a complete report of your business’s net profit.

Read the three outputs in the current tool

Open the Profit Margin Calculator. Enter 700 in Cost and 1000 in Selling price. The results are Profit: 300.00, Margin: 30%, and Markup: approximately 42.86%. Values update from the two fields; use Calculate & track as the calculator’s action. Read the labels before copying a percentage into another document. The interface has no target-margin field or automatic selling-price solver. It shows the consequences of the cost and price you entered rather than selecting a suitable price for you.

Understand why the percentages differ

Profit is selling price minus cost: 1000 − 700 = 300. Margin compares that difference with selling price, so 300 ÷ 1000 × 100 = 30%. Markup compares it with cost, so 300 ÷ 700 × 100 is about 42.86%. Both percentages describe the same 300 difference using different denominators. They are not interchangeable. As a quick check, adding 30% to a cost of 700 gives 910, not 1000. That 30% markup therefore does not produce a 30% margin.

Check break-even, a loss and zero cost

With cost and price both 1000, the difference and both percentages are zero. With cost 1000 and price 800, profit is −200, margin is −25%, and markup is −20%. Negative results indicate that the entered selling price is below the entered cost. At zero cost and a positive price, profit and margin are shown, while markup is unavailable because its denominator is zero. The tool accepts a non-negative cost and a positive selling price; a zero selling price cannot produce its margin calculation.

Keep precision and cost assumptions with the result

Displayed values are rounded, so retain the original cost and price if another calculation needs more precision. Record which costs you included and the item quantity alongside the percentages. If a fee or discount changes the amounts, update the inputs and check all three outputs again. This calculator performs the arithmetic on those two numbers; it does not determine accounting classifications or a recommended commercial margin. The calculation stays in your browser, and no customer list or uploaded document is needed for this workflow.

Sources

• Pearson: Margin and markup formulas