Margin vs markup calculator
Calculate the right percentage from cost to quote.
Compare gross margin with markup and calculate the selling price required for a target margin. The arithmetic runs in your browser; Sorsivo does not receive the values you enter.
Free distributor calculator
Check margin, markup and target price
Current price
What this price produces
- Gross profit
- AED 250.00
- Gross margin
- 20%
- Markup on cost
- 25%
Target price
Price needed for your margin
- Required selling price
- AED 1,250.00
- Gross profit
- AED 250.00
- Equivalent markup
- 25%
This calculator does not convert currencies or add tax. Use the same currency for cost and selling price, and include freight, duty, clearance and handling in the cost when you want to calculate margin from landed cost.
Margin and markup formulas
Margin uses selling price. Markup uses cost.
Gross profit = selling price − cost.
Margin % = gross profit ÷ selling price × 100.
Markup % = gross profit ÷ cost × 100.
Because the denominators differ, a 25% markup produces a 20% margin. Treating those percentages as interchangeable can leave a quotation below its intended commercial threshold.
- Confirm the approved cost basis.
- Calculate gross profit from selling price minus cost.
- Divide by selling price for margin.
- Divide by cost for markup.
Quick reference
Common margin and markup equivalents.
These pairs produce the same selling price when applied to the same cost.
| Target margin | Equivalent markup | Selling price on 100 cost |
|---|---|---|
| 10% | 11.11% | 111.11 |
| 20% | 25% | 125.00 |
| 25% | 33.33% | 133.33 |
| 30% | 42.86% | 142.86 |
| 40% | 66.67% | 166.67 |
Industrial quotation use
Calculate from a complete, reviewable cost.
- 01
Build the cost basis
Start with supplier price and add the approved currency, freight, insurance, duty, clearance and handling inputs that form landed cost.
- 02
Apply the intended margin
Use the target-margin calculation to find the required selling price. If your commercial policy is written as markup, keep that definition explicit.
- 03
Review the customer price
Check rounding, tax treatment, validity, delivery and technical exceptions before an accountable person approves the quotation.
Frequently asked questions
Margin calculator questions.
What is the difference between margin and markup?
Margin measures gross profit as a percentage of the selling price. Markup measures gross profit as a percentage of cost. The same transaction therefore produces different margin and markup percentages.
How do I calculate selling price from target margin?
Divide cost by one minus the target margin written as a decimal. For a cost of 100 and a target margin of 20%, the selling price is 100 divided by 0.80, which equals 125.
Should I use purchase cost or landed cost?
Use the cost basis your company has approved for pricing. For industrial quotations, that may be landed cost including supplier price, currency conversion, freight, duty, clearance and handling rather than purchase price alone.
Does this calculator add VAT or convert currencies?
No. It calculates margin and markup from the values entered. Use the same currency for cost and selling price, and handle tax according to the rules that apply to the quotation.