Pricing · 2026
Markup vs Margin Calculator
Markup is measured against cost. Margin is measured against price. Confusing the two is the most common pricing error in small business, and it always errs toward underpricing.
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Used only for the suggested price below.
Gross margin33.3%
- Markup
- 50.0%
- Gross profit per unit
- $50.00
- Price needed for target margin
- $166.67
- Markup equivalent of target margin
- 66.7%
Estimate only. This calculator uses published federal rates for tax year 2026 and does not account for state tax, credits, or your full situation. Use the separate state calculator for a state-rate estimate. It is not tax or financial advice. Rates last verified 2026-07-25.
Transparent method
How this calculator works
- Margin equals price minus cost, divided by price.
- Markup equals price minus cost, divided by cost.
- The target-margin price equals cost divided by one minus the target margin.
What the result does not include
- Cost must include every variable cost needed to deliver the unit if the margin is meant to represent gross margin.
- The calculator does not allocate fixed overhead or determine a market-acceptable price.
Common questions
What is the difference in one sentence?
Markup divides profit by cost; margin divides profit by price. A 50% markup is only a 33.3% margin.
Why does this matter so much?
Because the error is always in the same direction. If you need a 40% margin and apply a 40% markup instead, you actually earn a 28.6% margin — you have quietly given away a third of your intended profit on every sale.