What is the difference between margin and markup?

Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. The same ₹20 profit on a ₹80 cost and ₹100 price is a 20 percent margin and a 25 percent markup. Quoting one when the other was meant is one of the most common pricing errors.

How do I convert markup to margin?

Margin = markup ÷ (1 + markup). A 50 percent markup is a 33.3 percent margin; a 100 percent markup is a 50 percent margin. Going the other way, markup = margin ÷ (1 − margin).

What price gives a target margin?

Price = cost ÷ (1 − target margin). For a 40 percent margin on a ₹600 cost, price = 600 ÷ 0.6 = ₹1,000. Dividing is the step people miss; multiplying cost by 1.4 gives a 40 percent markup and only a 28.6 percent margin.

Is this gross or net margin?

Gross. It compares price with the direct cost of the product. Net margin also deducts operating costs, tax and interest and is a measure of the whole business, not a pricing tool.

Should GST be included in cost and price?

Use amounts exclusive of GST on both sides. GST on your purchase is input credit, not a cost, and GST on your sale is collected for the government, not revenue. Including it on one side and not the other distorts the margin.

Margin & Markup Calculator

Cost, price, gross margin and markup, any two to the rest, with the conversion most pricing mistakes come from.

Switch tool

I know

Cost per unit (₹, excl. GST)

₹

Selling price (₹, excl. GST)

₹

Pricing

Cost

₹ 0.00

Selling price

₹ 0.00

Gross profit per unit

₹ 0.00

Gross marginprofit ÷ price

0.0%

Markupprofit ÷ cost

0.0%

Gross margin on direct cost only. Use GST-exclusive amounts on both sides.

How it works

Margin

Profit as a share of the selling price. What the P&L shows.

Markup

Profit as a share of cost. What you apply when setting a price.

Conversion

Margin = markup ÷ (1 + markup). A 25% markup is a 20% margin.

Price from cost without confusing margin and markup

Start from cost and either the price you plan to charge, the margin you want to see in the accounts, or the markup you want to apply, and the calculator fills in the rest. The margin and markup are shown together every time, so the gap between them is never a surprise at month-end.

Three starting points

Cost and price, cost and target margin, or cost and markup.

Divide, don't multiply

A target margin means price = cost ÷ (1 − margin).

GST-exclusive

Input GST is credit and output GST is collected, so neither belongs in the margin.

Per unit or per order

The arithmetic is the same at any scale.