Price, margin and markup
General calculation · any country
Margin is measured on the selling price; markup is measured on the cost. Mixing them up is one of the most common pricing mistakes: a 30% markup does not give you a 30% margin.
Selling price
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Profit per unit
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Selling price
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Margin
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Markup
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Margin and markup equivalents
| Margin | Markup needed | Price with your cost |
|---|
How it is calculated
- Margin = (price − cost) ÷ price: measured on the selling price.
- Markup = (price − cost) ÷ cost: measured on the cost.
- Price from a margin = cost ÷ (1 − margin). Price from a markup = cost × (1 + markup).
Assumptions
- Amounts exclude sales taxes (VAT, GST…).
- Full unit cost: include everything you want the price to cover.