Calculate your profit margin and markup percentage from cost and selling price, or work backwards to find the selling price or maximum cost needed to hit a target margin.
What Is the Difference Between Profit Margin and Markup?
Profit margin expresses profit as a percentage of the selling price, while markup expresses that same profit as a percentage of the cost price. A product costing KES 100 and selling for KES 150 has a 33.3% margin (KES 50 profit ÷ KES 150 price) but a 50% markup (KES 50 profit ÷ KES 100 cost) — the two numbers describe the same KES 50 profit from different bases, and confusing them is the most common pricing mistake small businesses make.
How Do You Calculate Profit Margin?
Profit margin equals selling price minus cost price, divided by selling price, multiplied by 100. Enter your cost and selling price in the "Margin & Markup" tab and the calculator returns your profit, margin percentage, and markup percentage together, so you can see both figures at once instead of converting by hand.
How Do You Calculate the Selling Price From a Target Margin?
Selling price equals cost price divided by one minus the target margin (as a decimal) — not cost multiplied by the margin, which is a common error that under-prices goods. Use the "Find Selling Price" tab: enter your cost and the margin you want, and the calculator solves for the price that actually delivers that margin.
Why Can't I Just Add the Margin Percentage to My Cost?
Adding a percentage directly to cost gives you a markup, not a margin, because that added amount is a percentage of cost, not of the resulting price. A KES 100 item with 30% added the simple way sells for KES 130 — but KES 30 profit on a KES 130 price is only a 23.1% margin, short of the 30% margin actually intended. Dividing by (1 − margin) instead of multiplying by (1 + margin) is what correctly hits the target margin.
How Do You Find the Maximum Cost for a Target Margin?
Maximum cost equals selling price multiplied by one minus the target margin (as a decimal). This is useful when a selling price is fixed — by a market rate, a competitor, or an MSRP — and you need to know the highest price you can afford to pay a supplier while still hitting your target margin. Use the "Find Cost Price" tab for this.
What Counts as a Good Profit Margin?
A "good" margin depends entirely on the industry: grocery and general retail commonly run on thin 2–8% margins on high volume, while software, consulting, and luxury goods can sustain 60–90% margins because there's little to no per-unit cost of goods. There is no universal target — compare your margin against typical margins in your own sector rather than against a fixed benchmark.
Note: This calculator uses your own entered cost and price figures — it applies no jurisdiction-specific tax, duty, or currency conversion, so the result is a pure margin/markup calculation you can use for any currency or market.
What is the formula for profit margin?
Profit margin = (selling price − cost price) ÷ selling price × 100. A product costing KES 100 and selling for KES 150 has a profit of KES 50 and a margin of 33.3% (KES 50 ÷ KES 150).
What is the formula for markup?
Markup = (selling price − cost price) ÷ cost price × 100. The same KES 100 cost / KES 150 price example gives a 50% markup (KES 50 ÷ KES 100) — markup is always higher than margin on the same sale because it's measured against the smaller base (cost, not price).
How do I calculate a selling price that gives me a specific margin?
Selling price = cost price ÷ (1 − target margin as a decimal). To get a 40% margin on a KES 100 cost, divide 100 by (1 − 0.40) = 0.60, giving a selling price of KES 166.67 — not KES 140, which is a common mistake that actually produces only a 28.6% margin.
Can margin and markup ever be the same number?
Only at 0%, where there's no profit either way. Above 0%, markup is always numerically higher than margin for the same sale, since it divides profit by the smaller cost figure rather than the larger selling price.