Markup, Margin & ROI Calculator
Work out markup, profit margin and return on investment from cost and price — including why a 50 per cent markup is not a 50 per cent margin.
Markup & Margin
Price from a target
Charge —
Return on investment (ROI)
The only difference is the denominator
Both describe the same gap between cost and price. Markup divides it by the cost; margin divides it by the price. Buy for $100 and sell for $150 and you have made $50 either way — that is a 50% markup and a 33.3% margin:
| Cost | Price | Profit | Markup | Margin |
|---|---|---|---|---|
| $100 | $150 | $50 | 50.0% | 33.3% |
| $100 | $200 | $100 | 100.0% | 50.0% |
| $100 | $300 | $200 | 200.0% | 66.7% |
| $80 | $100 | $20 | 25.0% | 20.0% |
| $60 | $100 | $40 | 66.7% | 40.0% |
Neither is wrong; they answer different questions, and the margin is always the smaller of the two. Both describe exactly the same profit — asserted, not assumed — so the only thing at stake is which one somebody meant.
| Markup | is the same as margin |
|---|---|
| 10% | 9.1% |
| 25% | 20.0% |
| 50% | 33.3% |
| 100% | 50.0% |
| 200% | 66.7% |
| 400% | 80.0% |
| 900% | 90.0% |
Margin has a ceiling and markup does not
A margin is a fraction of the price, so it cannot reach 100% unless the cost is zero. A markup is a fraction of the cost, and nothing stops it:
| To get this margin | you need this markup |
|---|---|
| 50.0% | 100% |
| 80.0% | 400% |
| 90.0% | 900% |
| 95.0% | 1,900% |
| 99.0% | 9,900% |
| 99.9% | 99,900% |
The markup required runs to infinity as the margin approaches 100. The target box on this page caps at 99.9% when it is reading a margin and lifts the cap entirely when it is reading a markup, which is the interface quietly encoding the arithmetic. It is also why "a 200% margin" is not a thing anybody can have, while a 200% markup is an ordinary Tuesday in retail — if somebody quotes a margin above 100, they mean markup.
And the mistake costs most exactly where it matters most
The practical failure is pricing from the wrong formula: wanting a 40% margin and adding 40% to the cost. On a $100 item:
| Target margin | Correct price | Adding it as markup | Margin you get | Short by |
|---|---|---|---|---|
| 20% | $125.00 | $120.00 | 16.7% | 3.3 points |
| 30% | $142.86 | $130.00 | 23.1% | 6.9 points |
| 40% | $166.67 | $140.00 | 28.6% | 11.4 points |
| 50% | $200.00 | $150.00 | 33.3% | 16.7 points |
It always undershoots, and the shortfall grows from 3.3 points to 16.7 as the target rises. So the error is smallest on the low-margin goods where it would barely matter, and largest on the high-margin ones a business is relying on — at its worst precisely where it is most expensive.
A control worth noting: at a target of zero the two formulas give the same price. The divergence comes entirely from the size of the target, not from the arithmetic being unstable, which is why it creeps up on people gradually as their margins improve.
How to use
- Enter your cost and either the price or the margin you want.
- Read the markup, margin and profit.
- Check which of the two your industry quotes.
- Work backwards from a target margin to set a price.
Frequently asked questions
What is the difference between markup and margin?
The base they are measured against. Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. An item costing 100 and selling for 150 carries a 50 per cent markup and a 33.3 per cent margin — the same money described two ways.
Why does confusing them matter?
Because it silently destroys profitability. A business intending a 40 per cent margin but applying a 40 per cent markup earns roughly 28.6 per cent instead, and the shortfall compounds across every item sold. It is one of the most common and most expensive errors in small-business pricing.
How do I convert between them?
Margin equals markup divided by one plus markup. Going the other way, markup equals margin divided by one minus margin. A 100 per cent markup is a 50 per cent margin; a 50 per cent margin needs a 100 per cent markup.
Can margin exceed 100 per cent?
No. Margin is profit as a share of the price, so it approaches 100 per cent only as cost approaches zero and can never exceed it. Markup has no upper limit — an item costing 1 and selling for 100 carries a 9,900 per cent markup.
What is the difference between gross and net margin?
Gross margin counts only the direct cost of the goods. Net margin subtracts everything else — rent, wages, marketing, tax. A healthy gross margin can coexist with a net loss, which is why a business can appear profitable on each sale and still fail.
What margin should I aim for?
It varies enormously by industry, and any single figure would mislead. Grocery retail runs on very thin margins and high volume; software can run extremely high. The useful comparison is against your own sector and your own fixed costs, not a general benchmark.
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