Free calculators / Margin vs markup
Margin vs markup calculator
Set a price from your cost, or check the markup and margin on a price you already charge.
Result
Price before GST
–
The margin has to be under 100%.
This price is below your cost, so you lose money on each sale.
- Price before GST
- –
- Price including GST
- –
- Profit on each sale
- –
- Markup
- –
- Margin
- –
| Markup | Margin |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20% |
| 30% | 23.1% |
| 40% | 28.6% |
| 50% | 33.3% |
| 60% | 37.5% |
| 75% | 42.9% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
How it's worked out
Markup = profit ÷ cost
Margin = profit ÷ price
Margin = markup ÷ (1 + markup)
Markup = margin ÷ (1 − margin)
For example, a $40 item sold for $64 makes $24 profit. That's a 60% markup ($24 ÷ $40) but a 37.5% margin ($24 ÷ $64).
Common questions
- Why does the difference matter?
- If you need a 40% margin to cover your overheads but price with a 40% markup, you only get a 28.6% margin. On $100,000 of sales, that's about $11,400 less than you planned.
- Should I use prices with or without GST?
- Without. If you're registered for GST, the GST you collect goes to the ATO, so it isn't part of your profit.
- What's a good margin?
- It depends on your industry and overheads. Work out what your fixed costs need with the break-even calculator, then check your prices give you enough.