Free tool
Margin & Markup Calculator
Margin and markup are not the same number, and confusing them quietly costs businesses more than almost any other pricing error. Enter any two values and this gives you the rest.
Or price from a target margin
Required selling price: ₹0
If you had wrongly multiplied cost by 1 + target: ₹0
Result
- Profit per unit
- ₹0
- Margin on price
- 0%
- Markup on cost
- 0%
- Cost as % of price
- 0%
Markup → margin, at a glance
The two diverge fast. Worth pinning above a sales desk.
| Markup on cost | Actual margin | Sell ₹100 cost at |
|---|
The mistake that costs the most
A business decides it wants a 40% margin. Someone prices at cost × 1.40. On a ₹600 cost that is ₹840 — and the actual margin is 28.6%, not 40%. Every unit is under-priced by ₹160, and nobody notices because the arithmetic felt right.
The correct formula divides, it does not multiply:
Selling price = Cost ÷ (1 − margin) → 600 ÷ 0.60 = ₹1,000
Why the gap widens
At low percentages the two are close enough that the error hides. At higher ones they separate sharply: a 100% markup is a 50% margin, a 300% markup is a 75% margin. Businesses that quote in markup and budget in margin end up with a gross profit line that never matches the plan, and usually blame discounting.
Margin is a portfolio question, not a single number
The blended margin across a whole business is nearly useless for decisions. What matters is margin by product, by client, by branch — because that is where the loss-makers hide. Almost every business we look at has at least one line that is busy, respected internally, and quietly below water once you load it properly.
Finding it needs the gross margin split by segment every month, which is what our MIS reporting produces. Once you know the contribution per line, the break-even calculator tells you what volume actually covers your fixed costs.
Margin and markup — common questions
What is the difference between margin and markup?
Both describe the same rupees of profit, measured against different bases. Margin is profit as a percentage of the selling price. Markup is profit as a percentage of cost. A 50% markup is only a 33.3% margin — which is why quoting one and assuming the other is such an expensive habit.
How do I calculate profit margin?
Margin % = (Selling price − Cost) ÷ Selling price × 100. If you buy at ₹600 and sell at ₹1,000, the profit is ₹400 and the margin is 40%.
How do I price from a target margin?
Selling price = Cost ÷ (1 − target margin). For a ₹600 cost at a 40% target margin, that’s 600 ÷ 0.60 = ₹1,000. Do not multiply the cost by 1.40 — that gives ₹840, a 28.6% margin, and is the single most common pricing error we see.
Is gross margin the same as net margin?
No. Gross margin subtracts only the direct cost of the goods or services sold. Net margin subtracts everything else too — overheads, salaries, interest and tax. A healthy gross margin can still produce a net loss if the overhead base is too heavy for the volume.
What is a good profit margin?
It’s entirely sector-dependent — distribution can work on single digits while software runs at 80%+. The question worth asking isn’t whether your margin is good in the abstract, but whether it is stable, whether you know it by product and client, and whether it covers your fixed costs at your current volume.
Serving businesses across India
Do you know your margin by product?
Most businesses know it in aggregate and guess at the split. The split is where the money is.
Delivered within 24 working hours, or next month is on us. 24 working hours from the moment we have your complete data. The clock runs Monday to Saturday and pauses on Sundays and public holidays. Terms