Margin Calculator
Calculate profit margin, markup percentage, and selling price for your business.
Margin vs Markup
| Margin | Markup |
|---|---|
| 10% | 11.11% |
| 20% | 25% |
| 30% | 42.86% |
| 40% | 66.67% |
| 50% | 100% |
| 60% | 150% |
| 70% | 233.33% |
| 80% | 400% |
Industry Benchmarks
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Margin vs Markup: What's the Difference?
These terms are often confused, but they are very different!
Gross Margin = (Revenue - Cost) / Revenue ร 100
- "What percentage of the selling price is profit?"
Markup = (Revenue - Cost) / Cost ร 100
- "How much did I add on top of my cost?"
A 50% margin is NOT the same as a 50% markup! A 50% margin equals a 100% markup.
Example: You buy a product for $50 and sell it for $100.
- Profit: $50
- Margin: $50 / $100 = 50%
- Markup: $50 / $50 = 100%
Margin โ Markup Conversion
| Margin | Markup | Multiplier |
|---|---|---|
| 10% | 11.1% | 1.11x |
| 20% | 25% | 1.25x |
| 30% | 42.9% | 1.43x |
| 40% | 66.7% | 1.67x |
| 50% | 100% | 2x |
| 60% | 150% | 2.5x |
| 70% | 233% | 3.33x |
| 80% | 400% | 5x |
Fun Facts ๐
๐ Grocery Stores: The 2% Margin
Grocery stores operate on razor-thin margins of 1-3%. How do they survive?
- Volume: Millions of transactions
- Turnover: Products sell quickly
- A store doing $1M/week at 2% margin = $20,000/week profit
๐ Jewelry: The 50-300% Markup
That $1,000 diamond ring?
- Wholesale cost: ~$400
- Markup: 150%
- Your jeweler made $600
โ Coffee Shops: The $5 Latte
Your $5 latte:
- Coffee beans: $0.25
- Milk: $0.30
- Cup/lid: $0.15
- Total cost: ~$0.70
- Margin: 86%!
๐ป Software/SaaS: 80%+ Margins
Why tech companies are so valuable:
- Cost to serve one more user: ~$0
- No inventory, no shipping
- Margins of 70-90%
๐ Restaurant Math
Restaurant rule of thumb:
- Food cost: ~30%
- Labor: ~30%
- Overhead: ~30%
- Profit: ~10%
If food prices rise 10%, profit can drop to near zero!
Pricing Strategies
Cost-Plus Pricing
- Add a fixed markup to cost
- Simple but ignores market demand
Value-Based Pricing
- Price based on perceived value
- Higher margins possible
Competitive Pricing
- Match competitor prices
- May sacrifice margin
Keystone Pricing
- Standard 100% markup (50% margin)
- Common in retail
Smart businesses focus on margin, not markup. A 50% margin means half of every dollar is profit. A 50% markup means only one-third is profit!
Business Tips
1. Know Your Break-Even At what volume do you cover fixed costs?
2. Watch for Margin Erosion Small discounts add up fast:
- 10% discount on 50% margin = 20% profit loss
3. Calculate True Costs Include: shipping, returns, payment fees, labor
4. Industry Benchmarks Research typical margins in your industry
5. Pricing Power Can you raise prices? The most powerful business advantage