Margin and markup describe the same profit from two different angles, and mixing them up quietly under-prices products every day. This calculator computes both from cost and price — or works backwards from a target margin to the selling price.
The difference in one table
Take a $60 cost and a $100 price. Profit is $40 either way. Margin asks "what share of the price is profit?" — 40 ÷ 100 = 40%. Markup asks "how much above cost did we sell?" — 40 ÷ 60 = 66.7%. Markup is always the bigger number, and the gap widens as profitability grows: a 50% margin equals a 100% markup.
The pricing mistake that costs real money
To earn a 40% margin, you cannot multiply cost by 1.4. That gives $84 on a $60 cost — and a margin of only 28.6%. The correct move is division: cost ÷ (1 − 0.40) = $100. The "from cost & target margin" mode does this automatically, and it's why the target margin input stops at 95%: at 100%, the formula divides by zero, because no finite price makes an item with real cost pure profit.
Gross vs net
This is gross margin — per-item profit before overheads, salaries, rent and tax. A product line can carry a healthy 45% gross margin while the business nets 5% after everything else. Benchmarks vary enormously by industry (grocery 1–3% net, software 70%+ gross), so compare within your sector.
Related math
Markup-to-margin conversion is margin = markup ÷ (100 + markup). Discounting an already-priced item? The discount calculator shows the sale price, and the percentage calculator handles general percent questions. For volume economics — how many units cover fixed costs — a break-even calculator completes the picture.
For information only; not accounting advice.