Phase 1 · Core Sovereign Layer
Profit Margin & Markup Calculator
A 50% markup is a 33% margin — and mixing them up silently underprices your work. Enter cost and price to see margin, markup and profit side by side, with no sleight of hand.
Under the hood
The math, fully exposed
Same profit, two bases — that's the whole margin-versus-markup trap:
Profit per unit = price − cost
Margin = profit ÷ price (share of revenue kept)
Markup = profit ÷ cost (amount added on top)
Monthly profit = profit per unit × units sold
- Margin uses price, markup uses cost: markup always looks bigger, which is why it's the number people quote — and misread as margin.
- Margin is capped at 100%, markup isn't: you can mark up 300%, but you can never keep more than 100% of the price.
- Gross, not net: this is margin on unit cost only — overhead like rent and marketing still comes out after.
Your directives
What to do next, based on your numbers
Adjust the sliders to generate tailored recommendations.
Answers
Frequently asked questions
What is the difference between margin and markup?
Both measure the same profit, against different bases. Markup is profit as a percentage of cost (how much you add on top). Margin is profit as a percentage of price (the share of revenue you keep). A 50% markup is only a 33% margin. Confusing the two is one of the most common — and costly — pricing mistakes, because it makes you think you are more profitable than you are.
How do I convert markup to margin and back?
Margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin). So a 100% markup is a 50% margin; a 25% markup is a 20% margin. Markup is always the larger-looking number, which is exactly why suppliers and pricing guides quote it — it sounds better. This tool shows both from the same cost and price so there is no ambiguity.
What is a good profit margin?
It varies enormously by industry — grocery runs on single-digit margins, software on 80%+. As a rough guide for small product businesses, a 10% net margin is okay, 20% is good, and 30%+ is strong, but the right target depends on your costs, competition and volume. The point is to know your number and price deliberately, not to hit a universal figure.
Does this include all my costs?
This uses the cost you enter — typically the cost of goods sold (what each unit costs you to make or buy). It does not subtract overhead like rent, marketing or salaries, so the margin shown is a gross margin per unit. Your net margin after fixed costs is lower; pair this with a break-even analysis for the full picture. This is an educational model, not financial advice.