Margin Calculator

Calculate profit margins, markups, and selling prices to optimize your business pricing strategy.

Calculate Your Margins

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Results

Profit Margin

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Percentage of revenue that is profit

Breakdown

Cost: $0.00
Selling Price: $0.00
Profit: $0.00
Margin: 0%
Markup: 0%

Margin vs. Markup Comparison

Margin % Markup % If Cost is $100 Selling Price Profit

Understanding Margins and Markups

This margin calculator helps you determine profit margins, markups, and selling prices for your business. Understanding these concepts is crucial for pricing strategy and financial analysis.

Margin vs. Markup: What's the Difference?

While both margin and markup relate to profit, they are calculated differently and serve different purposes:

Margin

Margin is the percentage of selling price that is profit.

Formula: (Revenue - Cost) / Revenue × 100%

Example: If you sell an item for $150 that costs $100, your margin is ($150 - $100) / $150 × 100% = 33.33%

Markup

Markup is the percentage of cost that is added to create the selling price.

Formula: (Revenue - Cost) / Cost × 100%

Example: If you sell an item for $150 that costs $100, your markup is ($150 - $100) / $100 × 100% = 50%

Key Formulas

  • Selling Price: Cost / (1 - Margin%)
  • Cost: Selling Price × (1 - Margin%)
  • Profit: Selling Price - Cost
  • Margin to Markup Conversion: Markup% = Margin% / (1 - Margin%)
  • Markup to Margin Conversion: Margin% = Markup% / (1 + Markup%)

Pricing Strategy Tips

  • Know Your Costs: Include all direct and indirect costs when calculating your true cost basis.
  • Industry Standards: Research typical margins in your industry as a starting point.
  • Value-Based Pricing: Consider the perceived value to customers, not just your costs.
  • Price Elasticity: Understand how sensitive your customers are to price changes.
  • Competitive Analysis: Know your competitors' pricing but avoid race-to-the-bottom pricing wars.

Common Margin Ranges by Industry

Typical profit margins vary widely by industry:

  • Retail: 20-50% gross margin
  • Restaurants: 3-15% net margin
  • Manufacturing: 10-20% gross margin
  • Software/Tech: 50-80% gross margin
  • Professional Services: 15-30% net margin

Our margin calculator provides a powerful tool for analyzing your pricing strategy. By understanding the relationship between cost, price, margin, and markup, you can make more informed business decisions and optimize your profitability.