Business Calculators
Pricing Calculator: Markup, Margin and Selling Price
Enter your costs and pick a method: markup on cost, a target profit margin, or a price set against a competitor. You get the selling price, profit per unit, the break-even price and what the customer pays with sales tax.
Inputs
Recommended price
Fill the form and press Calculate.
Markup vs margin: the difference that misprices products
Markup is profit as a percentage of cost. Margin is profit as a percentage of the selling price. The same sale gives two different percentages, so a 50% markup is not a 50% margin.
- Price from markup = cost × (1 + markup)
- Price from margin = cost ÷ (1 − margin)
- Margin = markup ÷ (1 + markup)
Worked example: cost of $40
- 50% markup: $40 × 1.50 = $60.00. Profit is $20, which is a 33.3% margin.
- 50% margin: $40 ÷ 0.50 = $80.00. Profit is $40, which is a 100% markup.
- Competitor at $75, you go 10% under: $75 × 0.90 = $67.50. Profit is $27.50, a 40.7% margin.
Markup to margin at a glance
| Markup on cost | Margin on price | Price on a $100 cost |
|---|---|---|
| 25% | 20.0% | $125.00 |
| 50% | 33.3% | $150.00 |
| 100% | 50.0% | $200.00 |
| 150% | 60.0% | $250.00 |
Break-even price and target price
Your break-even price per unit is your full cost: materials, labour and your share of overhead. Any price above it earns profit and any price below it loses money. Your target price is the break-even price plus the profit you need, which is what the markup and target-margin methods calculate. To learn how many units you must sell to cover fixed costs, use the break-even calculator.
Sales tax is shown separately as what the customer pays. It is not your revenue, so it is left out of markup and margin. Related: wholesale and keystone markup, profit margin, freelance hourly rate.
Frequently asked questions
How do I calculate a selling price from cost?
Add up every cost per unit, then either multiply by one plus your markup, or divide by one minus your target margin. A $40 cost at a 30% margin gives $40 ÷ 0.70 = $57.14.
What is a good markup or margin?
It depends on your industry, volume and overhead, so there is no single number. Use the margin that covers your overhead and leaves the profit you need, then check it against competitor prices.
Should I use markup or margin?
Use markup if you think in terms of cost, as many retailers and tradespeople do. Use margin if you track profit as a share of revenue, as financial statements do. Pick one and label it clearly, because mixing them is the usual cause of underpricing.
What costs belong in the price?
Materials, labour and a fair share of overhead such as rent, software and insurance. Leaving overhead out makes the break-even price look lower than it really is.
Does the price include sales tax?
No. The recommended price is before tax. The calculator adds your sales tax rate on top to show what the customer pays.