An item costs 100, and you want a 20% margin. Adding 20% to cost gives a price of 120, but the 20 left over is only about 16.67% of that selling price. A 20% margin needs a price of 125. The difference is the base: margin uses selling price; markup uses cost. Knowing which percentage you mean helps you set a price that leaves the amount you expect above cost.
Set or check a price in three steps
- Step 1Match the cost to the selling unit
Use the cost of one item or one whole pack, depending on what you sell. Keep cost and price in the same currency.
- Step 2Choose the question you need answered
To set a price, enter your target margin or markup. To review a price you already charge, enter that selling price instead.
- Step 3Check what remains above cost
Read the amount and both percentages. Does the price cover your entered cost? Before using it, review any fees or expenses that still need to come out.
The formulas and their bases
Let C be cost per item and P be selling price per item. The amount above cost is P − C; a negative amount means a loss against that cost.
Margin (%) = (P − C) ÷ P × 100
Markup (%) = (P − C) ÷ C × 100
Price for target margin m (%) = C ÷ (1 − m ÷ 100)
Price for target markup u (%) = C × (1 + u ÷ 100)
Margin asks what share of the selling price remains, so it divides by P. Markup asks how much is added relative to cost, so it divides by C. A percentage is not defined when its denominator is zero. Business Queensland’s pricing guide gives further context on markup pricing and costs.
Two prices worked through
Cost 100, target margin 20%
The cost must cover the other 80% of the selling price. Divide 100 by 0.80:
Price = 100 ÷ (1 − 20 ÷ 100) = 125.00
Amount above cost = 125 − 100 = 25.00
Check current price with cost 100 and price 125: margin is 25 ÷ 125 × 100 = 20%, while markup is 25 ÷ 100 × 100 = 25%. Both describe the same sale.
Cost 19.99, target margin 30%
The exact price is 19.99 ÷ 0.70 = 28.557142… . The smallest price in 0.01 increments that reaches the target is 28.56.
Amount above cost = 28.56 − 19.99 = 8.57
Margin ≈ 30.007%; markup ≈ 42.8714%
Rounding down to 28.55 leaves 8.56 and a margin of about 29.9825%, below the target. The achieved percentages use the final price, so upward price rounding can leave a margin slightly above the target.
Frequently asked questions
Does switching margin and markup convert my target?
No. The number stays the same, but its base changes. Margin uses selling price; markup uses cost. Choose the basis you mean before using the result.
Can I use a 100% margin?
With positive cost, no finite price gives a 100% margin. A zero-cost item sold for a positive price does have a 100% margin. A 100% markup is valid and doubles the cost.
What happens with a loss or zero?
A price below cost gives a loss. Margin is not defined at zero selling price; markup is not defined at zero cost. When both are zero, the amount is zero and neither percentage is defined. Finding a price requires positive cost.
Does the amount above cost include all my expenses?
Only the cost you enter is included. Omitted delivery, fees or overhead can reduce what remains. Avoid counting an expense twice. A fee based on selling price changes with that price and cannot simply be treated as a fixed cost.
Can I use any currency or price increment?
Use one currency throughout; there is no conversion. Prices use up to two decimals. Finding a price rounds upward to 0.01 only when needed. For another selling increment, adjust the price and check it again. Percentages show up to four decimals; ≈ marks a rounded check result.
Related calculations
- Percentage Calculator — check an amount as a share of a chosen base.
- Percentage Increase Calculator — compare an existing price with a higher price.
- Percent Off Calculator — find the price received after a discount.
- Stacked Discount Calculator — check successive discounts on a chosen price.