Margin and Markup Calculator
Work out margin, markup and selling price from cost, convert markup to margin, and see what a discount does to your margin before you quote. Pick what you want to work out and type your numbers.
Your numbers
What the item costs you: purchase price or cost to make.
Gross margin
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- Markup
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- Gross profit
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The calculation runs in your browser and ParrotNotes does not store your numbers. They sit in the page address so you can bookmark or share the result.
Margin vs markup
Margin and markup both start from the same gross profit, the selling price minus the cost. Margin divides that profit by the selling price; markup divides it by the cost.
Take an item that costs $60 and sells for $100. The gross profit is $40. The margin is $40 ÷ $100 = 40%, and the markup is $40 ÷ $60 = 66.7%. Same deal, two very different numbers, which is why a quote review goes wrong when one person means margin and the other means markup.
Margin to markup conversion table
Markup = margin ÷ (1 − margin), and margin = markup ÷ (1 + markup). The table below is worked out from those formulas.
| Margin | Markup | Price on a $100 cost |
|---|---|---|
| 10% | 11.1% | $111.11 |
| 15% | 17.6% | $117.65 |
| 20% | 25.0% | $125.00 |
| 25% | 33.3% | $133.33 |
| 30% | 42.9% | $142.86 |
| 40% | 66.7% | $166.67 |
| 50% | 100.0% | $200.00 |
| 60% | 150.0% | $250.00 |
| 75% | 300.0% | $400.00 |
When reps quote on margin and when on markup
Distributors and manufacturers often set pricing targets as a margin, because margin ties straight to the profit line: a 25% margin means 25 cents of every sales dollar is gross profit. Cost-plus pricing, and many trades, talk in markup, because you start from what the job costs.
Neither is wrong. The rule is to say which one you mean, in the quote review, in the pricing sheet and in the approval email. "We're at 30" can mean an item that costs $100 priced at $130 or at $142.86.
What a discount does to your margin
A discount comes straight out of the gross profit, so it cuts the margin faster than it looks. An item listed at $100 with a $70 cost has a 30% margin; 10% off takes the net price to $90 and the margin to 22.2%. A discount equal to the margin, 30% here, wipes out the profit altogether.
If you know the customer will ask for a discount, set the list price so the margin survives it. To keep 25% after 10% off on a $70 cost, list at $70 ÷ 0.75 ÷ 0.9 = $103.70. The Discount check mode above does this for your numbers.
More for reps who quote: RFQ template for manufacturers and distributors, What is an RFQ?, Industrial sales, Building materials sales.
Win the quote, not just the math
The price is the easy part. What the buyer said about budget, timing and competitors is what wins the quote: record the call with ParrotNotes and get a summary with next steps.
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