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Markup vs margin calculator

Set a price from the margin you want, or check what a price really leaves you. It shows margin and markup side by side, because they're not the same thing.

Margin calculator

What do you want to work out?
Price excl. GST
$66.67
Price incl. GST
$76.67
Margin
40%
Markup
66.7%

Profit per sale: $26.67 on a cost of $40.00. Margin is profit ÷ price; markup is profit ÷ cost.

The short answerMargin is profit as a share of the selling price. Markup is profit as a share of the cost. To price at a target margin, divide the cost by (1 − margin): a $40 item at a 40% margin sells for $66.67. A 50% markup on the same $40 gives $60, which is only a 33% margin. Work in prices before GST, then add 15% if you're registered.

What's the difference between markup and margin?

Both start from the same profit. Say you buy for $40 and sell for $60, so the profit is $20.

  • Markup divides by the cost: $20 ÷ $40 = 50%.
  • Margin divides by the price: $20 ÷ $60 = 33.3%.

Mix them up and you underprice. If you want a 50% margin but add a 50% markup, you're a third short. Here's how they line up:

MarkupEquals a margin of
20%16.7%
25%20%
33.3%25%
50%33.3%
66.7%40%
100%50%
150%60%

How do I set a price from a margin?

  1. Find your full cost per item: what you pay, plus freight and packaging.
  2. Pick the margin you need, as a decimal. 40% is 0.4.
  3. Divide the cost by (1 − margin). $40 ÷ 0.6 = $66.67.
  4. If you're GST-registered, add 15% for the shelf price: $66.67 × 1.15 = $76.67. Our GST calculator does that step.

What's a good profit margin?

It depends on your industry, so there's no single number. A good test: your gross margin (price less the direct cost of what you sell) has to cover rent, wages, power, software, insurance and your own pay, then leave a profit.

Add up a year of overheads and divide by your expected sales. If overheads are 30% of sales, a 30% gross margin only breaks even. You need more.

Questions owners ask

How do I calculate profit margin?

Subtract the cost from the selling price to get the profit, then divide the profit by the selling price. Something that costs $40 and sells for $70 makes $30 of profit, and $30 ÷ $70 is a 42.9% margin. Do the sum on prices before GST.

Is a 50% markup the same as a 50% margin?

No. A 50% markup means adding half the cost: $40 becomes $60, which is a 33.3% margin. To get a 50% margin you need a 100% markup, which doubles the cost: $40 becomes $80.

How do I convert markup to margin?

Margin = markup ÷ (1 + markup). A 25% markup is 0.25 ÷ 1.25 = 20% margin. To go the other way, markup = margin ÷ (1 − margin), so a 40% margin needs a 66.7% markup.

What's the difference between gross and net margin?

Gross margin only takes off the direct cost of what you sell, such as stock or ingredients. Net margin takes off everything else as well: rent, wages, marketing, interest and tax. Gross margin tells you if a product is priced right. Net margin tells you if the business makes money.

Should I include GST when working out my margin?

No. If you're GST-registered, GST isn't your money: you collect it for Inland Revenue and claim back the GST on your costs. Work out margins on prices and costs excluding GST, then add 15% to get the price customers pay.

General information, not financial advice. The maths is exact. Whether a margin is right for you depends on your costs and your market.

Where's this from?

Checked against these sources on 7 November 2026 by MySMB Editorial. Spotted a mistake? Tell us and we'll fix it.

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