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Retail Margin & Markup Calculator

Instantly convert between margin and markup percentages to price products correctly. Includes a profit sensitivity table for psychological pricing.

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About

Pricing errors destroy profitability faster than almost any other operational mistake. Merchants often confuse Gross Margin (profit as a slice of the selling price) with Markup (profit added on top of the cost). Confusing the two leads to underpricing; for instance, aiming for a 30% margin by applying a 30% markup results in a significant loss of expected revenue. This tool eliminates that ambiguity.

It calculates the exact selling price required to achieve a specific target and generates a sensitivity table. This allows you to visualize how small adjustments in price-often for psychological pricing strategies like ending in .99-impact your bottom line. It is essential for retailers, wholesalers, and e-commerce managers who need to protect their unit economics.

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Formulas

The relationship between Cost (C), Price (P), Margin (Mg), and Markup (Mk) is defined by these core equations:

1. To find Price from Cost & Margin:

P = C1 − Mg

2. To find Price from Cost & Markup:

P = C × (1 + Mk)

3. Conversion:

Mg = Mk1 + Mk

Reference Data

MetricMarginMarkup
DefinitionProfit divided by RevenueProfit divided by Cost
PerspectiveBased on Sales Price (Top Down)Based on Cost Price (Bottom Up)
FormulaP − CPP − CC
Common UseFinancial Reporting, AccountingSetting Prices, Purchasing
LimitNever exceeds 100% (unless cost is negative)Can exceed 100% (e.g. 200% markup)
Example50% Margin on $100 item100% Markup on $50 cost

Frequently Asked Questions

This is mathematically guaranteed. Margin is a percentage of the final selling price (a larger number), while Markup is a percentage of the cost (a smaller number). Since you divide the same profit dollars by a larger denominator (Price) for Margin, the percentage is always lower.
Only if the product cost is zero. In realistic retail scenarios, margin approaches 100% but never reaches it, whereas markup can easily exceed 100% (e.g., luxury goods or software).
Gross Margin is the standard for financial health analysis because it reflects what portion of every dollar earned is actual profit. Markup is a tool for execution-how to tag the price on the shelf.
The calculation will result in an error or infinite price because the formula divides by zero (1 - 1 = 0). You cannot sell an item with a cost greater than zero at a 100% profit margin; that implies the revenue is pure profit with zero cost.