# Profit Margin and Markup Calculator

A smart online tool for your business. Calculate your profit margin, markup, and other vital metrics in a few clicks.

Get startedA smart online tool for your business. Calculate your profit margin, markup, and other vital metrics in a few clicks.

Get startedA simple tool to calculate vital business indicators. Try it for yourself:

What does this calculator do?

With our tool, you can calculate:

Margin and markup. Markup is the difference between a product's selling price and its cost, i.e., your profit. Margin is the ratio of the markup and the selling price, expressed as a percentage.

Cost. Enter your markup and selling price values. The calculator will find the purchase price.

Selling price. Enter your purchase price and margin values. The calculator will find the selling price.

Why do I need to know margin and markup?

Markup indicates how much money you're going to make on a product or service. It can be expressed in both percentage and money value.

Margin shows whether selling a specific product or service is worth it economically. It helps you determine the ratio of your expenses to your profits. Also, margin indicates what return you'll get on your investments.

How to calculate profit margin and markup?

Margin in %: (Selling price – Purchase price) / Selling price * 100.

Margin in money value: Selling price – Purchase price

Markup in %: (Selling price – Purchase price) / Purchase price * 100.

Or you can use our online calculator to find these metrics. Simply enter your selling and purchase price values.

How do I find margin and markup in Excel?

Create a new document in Excel. Copy the text between the quotes and into the respective cells:

Cell A1 – "Cost"

Cell B1 – "Selling price"

Cell C1 – "Margin, %"

Cell D1 – "Markup, %"

Cell E1 – "Markup, money value"

Select C2 and paste this formula into it: = (B2 - A2) / B2 * 100. Into D2, paste this formula: = (B2 - A2) / A2* 100. Into E3, paste this formula: = B2 – A2.

Done! Now enter your Cost value into A2 and your Selling Price value into B2. The tool will calculate Margin in percentage and Markup in both percentage and money value.

What's the difference between margin and markup?

Markup is the difference between a product's selling price and its purchase price. This indicator is expressed in money value. If you purchase a product for $10 and sell it for $50, your markup is $40. In this case, your markup is the same as your profit.

To calculate markup as a percentage, you must divide Profit by Purchase Price and multiply the result by 100%. Let's take the example from above: $40 / 10 * 100% = 400%.

Margin is the ratio of Profit to Selling Price, expressed as a percentage. Example: $40 / $50 * 100% = 80%. Margin is always under 100%.

In plain language, Markup is the percentage ratio of Profit to Purchase Price, while Margin is the percentage ratio of Profit to Selling Price.

How do I determine the optimal markup?

To determine the optimal markup, you must compare your purchase price with the market average. Study your competitors and find their markups.

If you're not happy with your expected profit, your competitors probably have suppliers who charge lower prices. Find a way to reduce your purchase price or consider selling other products.

You can calculate markup for services as well, even if there is no established market price for this kind of service. As a purchase price, use the minimum price per 1 hour of work among your nearest competitors. As a selling price, use the amount of money you want to make per hour. The markup will be the difference beween these two values.

What are the things to consider when determining the optimal markup?

Your markup must justify your investment. In the best-case scenario, you should be able to pay off your investment in three years, tops. You must be happy with your income, considering your invested time and effort.

When determining your markup, follow these rules:

1. Your selling price must not be significantly lower than the market average. Damping reduces your potential profits and negatively affects the market situation.

2. Your selling price must be competitive. If your selling price is significantly higher than that of your competitors, your clients will likely turn their back on you.

How can I boost my sales?

To boost your sales and increase your profit margin, you must advance your brand recognition.

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DownloadLook at how great our calculator is:

Functionality

A one-stop service for finding margin, markup, price, cost, and profit.

Simplicity

Calculate any metric in two clicks! There's no need to know complex formulas. Our tool will handle everything for you!

Segmenting

Our calculator can split your purchase price into parts. This way, you can see what factors influence the cost.

Branding

All our users get a small-size logo for free!

Versatility

Our tool calculates business metrics for both goods and services.

Gifts

Use our calculator and get amazing bonuses for your business.

Not happy with your profit? We have a solution! Use Logaster to create a smart logo for your business. It's a surefire way to boost your brand recognition and improve your sales. Try it now and get a free small-size logo for your company!