What this margin and markup calculator does
This calculator finds your profit margin. You enter a selling price and a cost. The tool then compares the two. So you see the margin as a percent. It also shows the markup and the profit. The margin is shown as a percent.
Margin versus markup
Margin and markup are two views of profit. Margin is the profit as a share of price. Markup is the profit as a share of cost. So they use the same gap but different bases. Margin is always the smaller of the two. People often mix them up.
How it is calculated
The tool takes the gap between price and cost. It divides that by the price for the margin. It divides it by the cost for the markup. So a wider gap lifts both figures. The result is your profit margin. The calculator runs the numbers for you.
What the result tells you
The result shows your profit margin. A price of one hundred and a cost of sixty give forty percent. A higher price raises it. A higher cost lowers it. So it shows profit as a share of price. It is a straightforward figure.
The selling price
Your selling price is what you charge. It is the price the buyer pays. A higher price lifts the margin. So this number sets the top line. Use the price after any discount. It is the base of the margin. Enter your selling price.
The cost
Your cost is what the item costs you. It is the spend to make or buy it. A higher cost lowers the margin. So this number eats into the gap. Use the full cost per unit. Include the parts that vary. Enter your cost.
The markup
The tool also shows the markup. It is the gap over the cost. Here it is about sixty-seven percent. So markup looks bigger than margin. Sellers often set price by markup. But margin is what hits the bottom line.
The profit
The tool also shows the profit in your chosen currency. It is the price minus the cost. Here it is forty per unit. So it is the cash you keep per sale. More units multiply that profit. It is the gap in plain money.
How to use it
Enter your selling price first. Add the cost. Read the profit margin as a percent. Then see the markup and the profit. Try a higher price. Compare a few items. Use it to set fair prices.
The limits of this calculator
This tool comes with limits. It uses one price and one cost. It ignores overhead and fixed costs. Real profit also bears tax and fees. It looks at one unit only. So read it as a guide. So fold in your other costs.
A final tip
Use this to price with a clear margin. Remember markup and margin differ. Quote price by margin to protect profit. Include every cost in the cost field. Check the margin covers your overhead. Do not confuse the two figures. A careful price needs the full cost.