Margin and Markup Calculator
Compare two pricing scenarios side-by-side to maximize your business profits
Compare Two Pricing Scenarios
Scenario 1
Results
Scenario 2
Results
Example Comparison
Scenario: T-shirt Pricing Options
Option 1: 35% margin strategy
Cost: $100
Target margin: 35%
Required selling price: $153.85
Profit: $53.85
Option 2: 40% margin strategy
Cost: $100
Target margin: 40%
Required selling price: $166.67
Profit: $66.67
Analysis
Option 2 generates $12.82 more profit per unit but requires a higher selling price. Consider market demand and competition when choosing between higher profit per unit vs. potential volume.
Key Formulas
Margin
Margin % = (Profit ÷ Revenue) × 100
Percentage of revenue that is profit
Markup
Markup % = (Profit ÷ Cost) × 100
Percentage added to cost to get price
Revenue from Margin
Revenue = Cost ÷ (1 - Margin%/100)
Find selling price from cost and margin
Convert Markup to Margin
Margin = Markup ÷ (1 + Markup/100)
Convert between the two metrics
Pricing Tips
Compare multiple pricing scenarios before deciding
Consider market demand at different price points
Higher margins don't always mean higher total profits
Factor in all costs: materials, labor, overhead
Monitor competitor pricing regularly
Understanding Margin vs. Markup
Profit Margin
Profit margin is the percentage of revenue that becomes profit. It measures how much of each dollar of sales your company keeps after paying all expenses. Margin is calculated by dividing profit by revenue.
Margin % = (Revenue - Cost) ÷ Revenue × 100
Characteristics:
- • Always less than 100%
- • Based on selling price
- • Shows profit as % of revenue
- • Preferred for financial analysis
Markup
Markup is the percentage increase from cost to selling price. It shows how much you've added to the cost to determine your selling price. Markup is calculated by dividing profit by cost.
Markup % = (Revenue - Cost) ÷ Cost × 100
Characteristics:
- • Can exceed 100%
- • Based on cost price
- • Shows profit as % of cost
- • Common in retail pricing
Why Compare Two Scenarios?
Comparing different pricing scenarios helps you:
- • Optimize profit margins
- • Test market positioning strategies
- • Evaluate competitive pricing
- • Plan for different market conditions
- • Compare volume vs. profit per unit
- • Assess risk vs. reward scenarios
- • Make data-driven pricing decisions
- • Maximize overall profitability