Markup and Margin Calculator
Markup = (price − cost) ÷ cost. Margin = (price − cost) ÷ price. A $10.00 cost sold at $15.00 is a 50.0% markup but only a 33.3% margin.
Markup and margin use the price as entered.
Order costs (example values: replace with yours)
Fees here are charged on the selling price only. If your marketplace also charges on shipping paid by the buyer, or has a per-unit minimum, use the marketplace fee calculator and enter the result as a %.
Scenarios
The calculation runs in your browser. Fee and returns lines are rounded to the cent before they are subtracted.
How to Calculate Markup and Margin in 3 Steps
- Find gross profit. Subtract the cost per unit from the selling price. Both ratios share this number.
- Divide by cost for markup. Gross profit ÷ cost × 100. It tells you how much you added on top of what you paid.
- Divide by price for margin. Gross profit ÷ price × 100. It tells you how much of each sales dollar you keep.
| To find | Formula | On a $10.00 cost |
|---|---|---|
| Gross profit | price − cost | $15.00 − $10.00 = $5.00 |
| Markup % | (price − cost) ÷ cost × 100 | $5.00 ÷ $10.00 = 50.0% |
| Margin % | (price − cost) ÷ price × 100 | $5.00 ÷ $15.00 = 33.3% |
| Price from markup | cost × (1 + markup) | 40% markup: $14.00 |
| Price from margin | cost ÷ (1 − margin) | 40% margin: $16.67 |
| Margin from markup | markup ÷ (1 + markup) | 40% markup = 28.6% margin |
| Markup from margin | margin ÷ (1 − margin) | 40% margin = 66.7% markup |
The Markup and Margin Questions People Ask Most
$20.00 of gross profit, which is a 16.7% margin.
A $10.00 cost sold at $20.00 is a 100.0% markup and a 50% margin.
0.15 ÷ 1.15. Markup is always the larger of the two numbers.
0.30 ÷ 0.70. Margin targets need bigger markups than most people expect.
Markup looks up from cost
The base is what you paid, so markup has no ceiling. Markups above 100% are normal for many products.
Margin looks down from price
The base is what the customer paid, so margin stays below 100% while the cost is above zero.
Same profit, two labels
If a figure is quoted without saying which one it is, ask. Mixing them up underprices the product.
Markup to Margin Conversion Table
Margin = markup ÷ (1 + markup). Prices assume a $10.00 cost, so you can check any row in your head.
| Markup | Margin | Price on a $10.00 cost | Gross profit |
|---|---|---|---|
| 10% | 9.1% | $11.00 | $1.00 |
| 15% | 13.0% | $11.50 | $1.50 |
| 20% | 16.7% | $12.00 | $2.00 |
| 25% | 20.0% | $12.50 | $2.50 |
| 30% | 23.1% | $13.00 | $3.00 |
| 40% | 28.6% | $14.00 | $4.00 |
| 50% | 33.3% | $15.00 | $5.00 |
| 60% | 37.5% | $16.00 | $6.00 |
| 75% | 42.9% | $17.50 | $7.50 |
| 100% | 50.0% | $20.00 | $10.00 |
| 150% | 60.0% | $25.00 | $15.00 |
| 200% | 66.7% | $30.00 | $20.00 |
| 300% | 75.0% | $40.00 | $30.00 |
Margin to Markup Conversion Table
Markup = margin ÷ (1 − margin). Prices are rounded to the nearest cent; the exact figure is shown beside each one.
| Target margin | Markup needed | Price on a $10.00 cost | Exact price |
|---|---|---|---|
| 10% | 11.1% | $11.11 | $11.1111 |
| 15% | 17.6% | $11.76 | $11.7647 |
| 20% | 25.0% | $12.50 | $12.5000 |
| 25% | 33.3% | $13.33 | $13.3333 |
| 30% | 42.9% | $14.29 | $14.2857 |
| 35% | 53.8% | $15.38 | $15.3846 |
| 40% | 66.7% | $16.67 | $16.6667 |
| 45% | 81.8% | $18.18 | $18.1818 |
| 50% | 100.0% | $20.00 | $20.0000 |
| 55% | 122.2% | $22.22 | $22.2222 |
| 60% | 150.0% | $25.00 | $25.0000 |
| 65% | 185.7% | $28.57 | $28.5714 |
| 70% | 233.3% | $33.33 | $33.3333 |
| 75% | 300.0% | $40.00 | $40.0000 |
| 80% | 400.0% | $50.00 | $50.0000 |
An Austin, Texas Skincare Brand Pricing a Serum
The brand imports a serum at $4.10 per unit. Freight, duty and receiving add $2.10, so landed cost is $6.20. It sells for $18.90 on a US marketplace. These are the calculator's default inputs.
| Line | Amount | Share of the $18.90 price | Left after this line |
|---|---|---|---|
| Selling price | $18.90 | 100.0% | $18.90 |
| Landed cost | −$6.20 | 32.8% | $12.70 |
| Fulfillment (pick, pack, packaging) | −$1.85 | 9.8% | $10.85 |
| Outbound shipping | −$3.40 | 18.0% | $7.45 |
| Marketplace + payment fees at 12% | −$2.27 | 12.0% | $5.18 |
| Returns allowance at 4% | −$0.76 | 4.0% | $4.42 |
| Contribution profit | $4.42 | 23.4% | $4.42 |
- The 204.8% markup sets the price from the cost. The 67.2% gross margin is what the accounts show above the fulfillment line.
- The 23.4% contribution margin is the one to weigh against the cost of winning the order.
- The fee and shipping lines are example values. Replace them with your own rate card before you use the result.
Three Ways to Set a Price From the Same Cost
Each method starts from the $6.20 landed cost in the worked example. Only the last one looks at what the order costs to deliver.
| Method | Rule | Price | Markup | Gross margin | Contribution per order |
|---|---|---|---|---|---|
| Cost-plus markup | 100% markup on $6.20 | $12.40 | 100.0% | 50.0% | −$1.04 (-8.4%) |
| Gross margin target | 60% margin on $6.20 | $15.50 | 150.0% | 60.0% | $1.57 (10.1%) |
| Contribution target | 20% after order costs | $17.90 | 188.7% | 65.4% | $3.58 (20.0%) |
Cost-plus markup
Fast and easy to explain to a buyer. It ignores fees, shipping and returns, so the same markup can leave very different profit on two products.
Gross margin target
Matches how finance reports results. It still stops at cost of goods, so a high gross margin can hide a thin order.
Contribution target
Starts from what each order must leave behind. It needs real fulfillment, shipping and fee inputs, which is what the order cost fields are for.
| Measure | Divides | Answers | Worked example |
|---|---|---|---|
| Markup | Gross profit by cost | How much was added on top of cost? | 204.8% |
| Gross margin | Gross profit by price | What share of the sale is left after the product? | 67.2% |
| Contribution margin | Profit after order costs by price | What share is left after the order is delivered? | 23.4% |
| Break-even price | Order costs by (1 − fee % − returns %) | What is the lowest price that loses nothing? | $13.64 |
What Markup an Ecommerce Product Actually Needs
Work back from the contribution margin you want to keep. The table uses the worked example's costs and the same function as the tool.
| Target contribution margin | Lowest price | Markup on $6.20 | Gross margin | Contribution per order |
|---|---|---|---|---|
| Break-even (0%) | $13.64 | 120.0% | 54.5% | $0.00 |
| 10% | $15.48 | 149.7% | 59.9% | $1.55 |
| 15% | $16.60 | 167.7% | 62.7% | $2.50 |
| 20% | $17.90 | 188.7% | 65.4% | $3.58 |
| 25% | $19.42 | 213.2% | 68.1% | $4.86 |
| 30% | $21.22 | 242.3% | 70.8% | $6.37 |
Fulfillment
Pick, pack and packaging. Close to flat per order, so it weighs more on a cheap item than an expensive one.
Outbound shipping
Billed on weight and size, not on price. A light, bulky product can carry a large shipping line.
Fees
Referral and payment fees scale with price, so a price rise loses that share to the fee.
Returns
An allowance for refunds, return postage and stock you cannot resell, entered as a share of price.
How a Discount Changes Margin and Contribution
A discount comes straight off profit, while fulfillment and shipping stay the same. These rows use the worked example at $18.90.
| Discount | New price | Gross margin | Contribution per order | Extra unit sales needed | Units to match 100 |
|---|---|---|---|---|---|
| 10% | $17.01 | 63.6% | $2.84 | 55.7% | 156 |
| 15% | $16.07 | 61.4% | $2.05 | 115.7% | 216 |
| 20% | $15.12 | 59.0% | $1.26 | 250.8% | 351 |
| 25% | $14.18 | 56.3% | $0.46 | 860.9% | 961 |
| 30% | $13.23 | 53.1% | −$0.34 | No lift recovers it | — |
Extra unit sales keep total contribution profit flat. They are rounded up to the next 0.1%, and units up to the next whole unit.
Check contribution, not gross margin
At 20% off, gross margin moves from 67.2% to 59.0%. Contribution per order drops from $4.42 to $1.26, because order costs do not shrink with the price.
Price the lift you need
Compare the extra unit sales in the table with what past promotions actually delivered on this product and channel.
Try a smaller discount
Type a lower discount into the calculator to see how quickly the required lift comes down before you commit to a promotion.
Six Markup and Margin Mistakes That Underprice a Product
Applying a markup when a margin was asked for
A 50% margin on $10.00 needs $20.00. A 50% markup gives $15.00, a 33.3% margin. On 5,000 units that is $25,000.00 of gross profit instead of $50,000.00.
Using factory cost
At $18.90, the $4.10 factory price shows a 78.3% margin. The $6.20 landed cost gives 67.2%.
Charging fees on cost
A 12% fee on the $6.20 cost is $0.74. Charged on the $18.90 price it is $2.27, $1.53 more per order.
Subtracting the discount from the margin
A 20% discount on a 67.2% margin is not 47.2%. At $15.12 the gross margin is 59.0%, but contribution falls from $4.42 to $1.26.
Cutting cents instead of rounding
A 30% margin on $6.20 is $8.8571. Dropping the extra digits gives $8.85 at 29.94%, just under target. Rounding gives $8.86 at 30.02%.
Averaging margins across SKUs
One $10.00 sale at 50% and one $100.00 sale at 20% average 35.0%. Weighted by revenue, the real margin is 22.7%.
Why There Is No "Typical Margin by Industry" Table Here
What a benchmark table hides
- Whether the figure is markup or margin
- Whether cost means factory price or landed cost
- Whether fees, shipping and returns are included
- Which channel, year and sample it came from
What to compare against instead
- Your own contribution margin per channel
- What it costs you to acquire an order
- Your overheads as a share of revenue
- The same SKU's margin last quarter
Before you sign off a price
- Confirm whether the target you were given is a markup or a margin.
- Check that the cost field holds landed cost, with current duty and freight.
- Run the promotional price as well as the list price.
- Run each sales channel separately, because fees and shipping differ.
- Re-run it when carrier rates or marketplace fees change.
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Markup and Margin Questions
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