Markup vs Margin: What Is the Difference?
Markup is profit measured against cost; gross margin is profit measured against selling price. A 50% markup on a $40 cost creates a $60 price and a 33.3% gross margin—not a 50% margin.
Markup and margin use different bases
- Markup % = (selling price − cost) ÷ cost × 100.
- Gross margin % = (selling price − cost) ÷ selling price × 100.
With a $40 unit cost and a $60 selling price, gross profit is $20. Markup is $20 ÷ $40 = 50%; gross margin is $20 ÷ $60 = 33.3%.
Use the markup and margin calculator
Enter unit cost and the markup percentage you plan to apply. The markup and margin calculator returns the resulting selling price, gross profit per unit and gross margin. The example price is before GST.
This is a gross product calculation. It does not deduct overhead, shipping, payment fees, discounts, returns or tax unless those costs are included in your unit cost.
Choose a price using more than a percentage
Markup can be a convenient way to build a price from cost, while margin helps you see what share of the selling price remains after product cost. Neither number alone proves a product is profitable after all business expenses. Review total costs and customer value too. Business.gov.au’s pricing guidance covers cost, value and market considerations.
If your customer-facing price must include GST, calculate the appropriate GST-inclusive price separately. Use the GST calculator for a basic standard-rate estimate.
Try the related calculator
Use the Markup and margin calculator to apply the formula to your own figures. Results are estimates using the assumptions shown on the tool page.
Frequently asked questions
Is a 50% markup the same as a 50% margin?
No. A 50% markup on cost creates a 33.3% gross margin. The percentages use different bases: cost for markup and selling price for margin.
How do I calculate a selling price from markup?
Multiply unit cost by 1 plus the markup rate. For a $40 cost and 50% markup, $40 × 1.5 = $60 before GST.
Does gross margin include overheads?
The calculator’s gross margin only compares unit cost with selling price. It does not include overheads or other expenses unless those are included in your cost input.