Margin & Markup Calculator

Margin, markup, break-even volume and the price you need to charge.

Cost per unit ($)

Selling price ($)

Fixed costs ($) — optional

Target margin (%) — optional

Units sold — optional

Extra variable cost per unit ($)

Result

Margin and markup are not the same

Margin is profit as a share of the selling price: (price − cost) ÷ price. Markup is profit as a share of cost: (price − cost) ÷ cost. A 50% markup on a $40 cost gives a $60 price, which is only a 33% margin. This single confusion causes endless pricing arguments and under-priced products.

The conversion both ways: margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin).

Contribution margin and break-even

Contribution margin is price minus all variable costs. It is the amount each sale contributes toward fixed costs. Break-even volume is fixed costs ÷ contribution per unit: with $20,000 fixed costs and $60 contribution per unit, you need 334 units before the business makes a dollar.

Why discounting is dangerous

A 20% discount does not reduce profit by 20%. At a 40% margin, cutting the price 20% removes half your profit — so you must sell twice as many units to earn the same money. Volume rarely rises that much, which is why discount-led growth often increases revenue while shrinking profit.

Gross versus net margin

Gross margin covers cost of goods; net margin also subtracts overhead, marketing, taxes and interest. A healthy 60% gross margin can become a thin 8% net margin once ad spend and overhead are included. Always check which margin is being quoted before comparing businesses.