Margin & Markup Calculator — With Discount Impact
Margin and markup describe the same profit against different denominators, which is why a 50% markup is a 33% margin and mixing them up quietly costs money on every sale. Pick the two values you know — cost and price, cost and a target margin, price and the markup applied, any combination — and the other two are calculated. Then add a discount to see the price it produces and how much of the profit it consumes.
Enter what it costs and what it sells for; margin and markup are both calculated.
Your numbers
What the unit costs you.
What the customer pays.
Discount (optional)
Percentage off the price above.
Result
Fill in both fields above and the other two are calculated here.
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Try Moda free →Margin vs markup: the same profit, two denominators
Both describe the gap between cost and price. Margin measures it against the price — a $70 item costing $42 has $28 of profit, and $28 ÷ $70 is a 40% margin. Markup measures the same $28 against the cost: $28 ÷ $42 is a 66.7% markup. Same product, same profit, two numbers that are never equal above zero, and markup is always the larger one. The conversion is margin ÷ (1 − margin) in one direction and markup ÷ (1 + markup) in the other. Retail and wholesale conventionally quote markup; finance, accounting, and investors talk in margin — which is exactly why the two words end up in the same conversation meaning different things.
The mistake this page exists to prevent
Someone is told to hit a 30% margin, applies a 30% markup instead, and ships a product at a 23% margin. On a $100 cost, the 30% markup gives a $130 price where the 30% margin needs $142.86 — a $12.86 shortfall on every single unit, invisible in the price list and compounding across a catalogue. The error is always in the same direction (markup-as-margin under-prices, never over-prices) and it never announces itself, because a $130 price looks perfectly reasonable. Divide by cost for markup, by price for margin, and pick the mode above that matches the number you were actually given.
The 100% margin edge, and why markup has no ceiling
Margin is bounded: it cannot exceed 100%, because profit cannot exceed the price it is part of, and a 100% margin means the cost is exactly zero. Markup has no ceiling at all — a $1 cost sold at $100 is a 9,900% markup, which is a perfectly ordinary situation for software or digital goods. This asymmetry is why the conversion breaks at exactly one point: at a 100% margin the markup formula divides by zero, so markup is genuinely undefined rather than very large. This calculator says "undefined" there rather than showing an infinity or a misleadingly enormous percentage, and it rejects margins above 100% outright since they would imply a negative cost.
What a discount really costs you
A discount comes entirely out of profit, never out of cost, which is why its effect on the bottom line is far larger than the percentage suggests. Take that $70 item at a 40% margin: a 20% discount drops the price to $56 and the profit from $28 to $14 — half the profit gone for a fifth off the price. The general rule is that a discount removes discount ÷ margin of your profit, so on a 20% margin a 10% discount takes half of it and a 20% discount takes all of it. The discount section shows the remaining profit, the new margin, and the share of profit given up, and warns you when the discounted price has gone below cost. This is arithmetic on the numbers you type, not pricing or financial advice — and it says nothing about the extra volume a discount might bring.
Frequently asked questions
What is the difference between margin and markup?
The denominator. Margin is profit divided by the selling price; markup is the same profit divided by the cost. A product bought for $42 and sold for $70 has a 40% margin and a 66.7% markup — identical profit, two different percentages. Markup is always the bigger number.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup is 0.5 ÷ 1.5 = 33.3% margin. Going the other way, markup = margin ÷ (1 − margin), so a 50% margin is a 100% markup. Both directions are handled by the modes above.
What price do I need for a 40% margin?
Divide the cost by 0.6 — cost ÷ (1 − margin). A $42 cost needs a $70 price. Notably that is not the same as adding 40% to the cost, which would give $58.80 and only a 28.6% margin. Use the "Cost + margin" mode and the correct price is calculated for you.
Can margin be more than 100%?
No. Margin is profit as a share of the price, and profit cannot exceed the price it comes out of. A 100% margin means the cost is zero; anything higher would require a negative cost, so the calculator rejects it. Markup has no such limit — it can run to thousands of percent for products that cost almost nothing to reproduce.
How much does a 20% discount cost me?
Roughly discount ÷ margin of your profit — so on a 40% margin a 20% discount removes half of it, and on a 25% margin it removes 80%. Enter your cost and price above and then a discount, and the exact remaining profit, new margin, and share of profit given up are all shown, along with a warning if the discounted price drops below cost.
Is this gross margin or net margin?
Gross, at the unit level: it compares one price to one cost. Net margin accounts for overheads, salaries, marketing, and tax, none of which this calculator knows about. A healthy unit margin and a negative net margin are entirely compatible, so treat the number here as an input to pricing rather than as a measure of whether the business makes money.