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Small-business finance
Markup vs margin
Convert cost and desired gross margin into price without confusing markup.
Your inputs
Complete only the fields for your selected method. Use one consistent job or reporting period. Zero means intentionally zero, not unknown. Missing costs and market rates are not added automatically. Currency selection labels amounts; it does not convert exchange rates.
Methods, assumptions and worked example
How this calculation works
price=cost/(1-margin); markup=(price-cost)/cost.
Gross margin is profit divided by selling price. Enter all costs on the same time basis. Rates and productivity are your assumptions, not industry averages.
What information do I need?
Use records for the same job, equipment or accounting period. Only the fields for your selected entry method are required. An unknown amount is not zero.
Input definitions and where to find them
- Unit cost (selected currency): Matching invoice, quote, statement, bookkeeping record or explicit budget amount for unit cost. Use the stated period and exclude amounts already counted in another field. Zero means intentionally excluded/not incurred, not unknown.
- Desired gross margin (%): Desired gross profit ÷ SELLING PRICE ×100, not markup on cost.
Use the Where to find this value controls beside the inputs for available work-it-out helpers. Estimates remain your assumptions; a helper does not verify the source figures.
Worked example
Example amounts use US dollars (USD).
Example answer: Selling price is $133.33 for the illustrative inputs below.
Example inputs
- Unit cost: $100.00
- Desired gross margin: 25.00 %
- Selling price
- $133.33
- Markup on cost
- 33.33 %
- Gross margin
- 25.00 %
- Gross profit
- $33.33
These illustrative values are not recommended rates or industry averages. Replace every example input with your own figures.
Use the result well
Convert cost and desired gross margin into price without confusing markup.
Keep inputs on the same scope and time basis. Calculations retain precision internally; displayed values generally round to two decimal places, with extra precision for very small values and whole-unit rounding where required. Economic comparisons describe your supplied assumptions and do not guarantee future results.
This tool provides business arithmetic. It does not approve engineering designs, establish legal or tax treatment, select equipment or certify safe operating conditions.
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