Pricing & Markup Guide
Use markup and target margin logic to set prices that cover cost, support profit goals, and still fit the market.
What This Calculator Measures
This calculator helps you move between cost, selling price, markup percentage, and margin percentage. It is useful when you need to set a new price, test discount risk, or understand why a price that looks profitable still produces weak margins.
Inputs You Need
You usually enter product or service cost, current selling price, and optionally a target markup or target margin. Cost should include the direct inputs needed to deliver the sale, and for service businesses it may also include delivery labor or subcontractor cost.
Core Formulas
Markup = Profit / Cost and Margin = Profit / Selling Price. To price from a target margin, use Price = Cost / (1 - Margin %). To price from a target markup, use Price = Cost x (1 + Markup %).
How to Interpret the Result
Markup is useful for setting prices from cost. Margin is better for comparing actual profitability across products, services, and industries. A price can show strong markup but still weak margin if costs are high relative to revenue.
Worked Example
If cost is $50 and price is $100, profit is $50. Markup is 100% because profit equals cost. Margin is 50% because profit is half of the selling price. If you want a 40% target margin on a $50 cost, the required price is about $83.33.
Common Mistakes
The biggest mistake is treating markup and margin as interchangeable. Another is pricing from direct cost only while ignoring payment fees, returns, packaging, fulfillment, or discounting. Clean pricing decisions come from testing both unit economics and market tolerance together.
Open the Calculator
Use the calculator when setting new prices, checking discount impact, or translating target margins into a real selling price.