How do I price for a 40% margin?

Divide the cost by 0.6 — that is, by one minus the margin. Multiplying by 1.4 is the classic mistake: it produces a 40% markup, which is only a 28.6% margin, and on a $60 cost it leaves $16 per unit on the table against the price you meant to charge.

Which should I use when talking to suppliers or accountants?

Accountants and financial statements speak in margin, because it relates profit to revenue. Trades and retail often quote markup, because it is applied to cost at the till. The safe habit is to name the base every time — "40% on cost" or "40% of price" — and this calculator always shows both.

Margin & Markup Calculator

Margin is a share of the price; markup is a share of the cost, and pricing as if they were the same number quietly gives away a sixth of your profit. Convert between the two, price for a target margin the right way, and see the common mistake printed beside the published method.

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Estimate only — not tax, legal, or accounting advice. This is the published math for margin & markup calculator. Confirm final figures with your payroll provider, accountant, or the state agency before acting on them.

Cost per unit

Selling price

Cost

$60.00

Price

$100.00

Margin (of price)

40%

Markup (of cost)

66.67%

Method: Margin = profit ÷ price; markup = profit ÷ cost; price for a target margin = cost ÷ (1 − margin). Pinned by round-trip identity tests in tests/pricing.test.ts.

🎓 Understand this tool

What it is

A converter for the two ways of stating the same profit. Margin measures it against the price a customer pays; markup measures it against the cost you paid. The numbers differ, always, and the gap widens as profit grows — a 100% markup is only a 50% margin.

How it works

Margin is profit divided by price; markup is profit divided by cost; and a price that achieves a chosen margin is cost divided by one minus that margin. The last one is where the money is lost: multiplying cost by one-plus-the-margin feels symmetrical and is simply wrong.

Getting the most from it

If you know both cost and price, start there — the tool reports both figures and you can see how far apart they sit.
To set a price, choose whether your target is a margin (share of price) or a markup (share of cost), and say so explicitly.
Read the comparison box in target-margin mode: it prices the common mistake next to the published method and shows the per-unit difference.
Use the converter when a supplier or a book quotes one figure and your spreadsheet expects the other.

Reading your result

Both percentages always describe the same dollars. If the margin figure looks surprisingly low next to the markup you applied, nothing is wrong — that is the relationship, and it is why a shop applying a 30% markup is not earning a 30% margin.

What it can't tell you

It prices one unit in isolation. It does not know your volume, your fixed costs, or what the market will bear — the break-even calculator handles the first two, and no calculator handles the third.

Frequently asked questions

Margin measures profit as a share of the PRICE; markup measures the same profit as a share of the COST. A 50% markup is only a 33.3% margin. They are the same dollars viewed from different ends, and mixing them up prices products lower than intended.

Part of: Pricing, Margin and Break-Even →

Related calculators

Break-even

Work out how many units you need to sell before the business covers its costs. Charts the crossing point, counts your own pay as a cost, includes the card fees and refunds most calculators leave out, and separates cash break-even from the accounting one. A planning estimate from your own figures.

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🧮Margin & Markup Calculator