Margin and markup describe the same profit two ways: margin is profit as a share of the selling price, markup is profit as a share of cost. A 50% markup is only a 33.3% margin, and no markup, however large, reaches a 100% margin. Enter a cost and either percentage in the calculator below to see the price, profit per unit and the other percentage; the loaded example prices a $22 unit cost at a 45% margin, $40.00, which is an 81.8% markup.
A free tool for the question behind every set of wholesale terms: what margin am I really making at this price or markup?
Most wholesale margin surprises are not about costs. They are about a word. A buyer asks for 40% off, a sales rep quotes cost plus 50%, a spreadsheet column says “margin” and holds a markup. Each of those percentages sounds like the same thing, and each one leaves a different amount of money on the table.
This calculator takes your unit cost and whichever percentage you are working to, margin or markup, and shows you the price, the profit per unit and the percentage you did not type. The tool comes first; the difference between the two, how to convert, and why a 100% margin can never happen follow.
Wholesale margin calculator
What to enter and what you get back
Enter your unit cost, choose whether your target is a gross margin % or a markup %, and type the percentage. If the unit carries overhead, add it per unit or as a total spread over a number of units. An RRP multiplier is optional and shows what the retailer would charge.
You get back the selling price, the profit per unit, and the equivalent of whatever you entered: type a margin and the calculator shows the markup it takes to get there; type a markup and it shows the margin that markup really gives you. Margins of 100% or more are refused, because no price can reach them. Markup is uncapped.
To test a markup you have been quoted, switch the target to markup %. On the example’s $22.00 cost, a 50% markup gives a $33.00 price and a margin of only 33.3%.
What is the difference between margin and markup?
Both start from the same profit per unit, the selling price minus the cost. They divide it by different things:
- Gross margin % = profit ÷ selling price. It answers: of every dollar a customer pays, how much do I keep?
- Markup % = profit ÷ cost. It answers: how much did I add on top of what the unit cost me?
Because the selling price is always bigger than the cost (when you make a profit), the margin is always the smaller of the two numbers. That is why confusing them hurts in one direction only: treat a markup as if it were a margin and you believe you are keeping more than you are.
How to convert markup to margin, and back
You do not need a price to convert, only the percentage:
- Markup to margin: margin = markup ÷ (1 + markup). A 50% markup is 0.5 ÷ 1.5 = 33.3% margin.
- Margin to markup: markup = margin ÷ (1 minus margin). A 45% margin is 0.45 ÷ 0.55 = 81.8% markup.
One pairing is worth remembering: a 100% markup is exactly a 50% margin. That is keystone pricing, where the retail price is double the wholesale price.
Worked example, step by step
This is the example the calculator loads: an $18.00 unit cost plus $4,000 of overhead spread over 1,000 units, priced to a 45% gross margin.
Overhead per unit is $4,000 ÷ 1,000 = $4.00, so the full unit cost is $18.00 + $4.00 = $22.00. The price that keeps a 45% margin is:
Price = $22.00 ÷ (1 minus 0.45) = $22.00 ÷ 0.55 = $40.00.
Profit per unit is $40.00 minus $22.00 = $18.00. Now read that $18.00 both ways:
- Margin: $18.00 ÷ $40.00 = 45.0% of the selling price.
- Markup: $18.00 ÷ $22.00 = 81.8% on top of cost.
Same product, same price, same $18.00; two very different-looking percentages. With the RRP multiplier at 2, the calculator also shows an $80.00 RRP. Load it above and you should see $40.00, $18.00 profit and an 81.8% markup.
Markup needed for each target margin on a $22 unit cost
If you set wholesale terms by margin, this is the markup each target takes on the example’s $22.00 cost, and the price it produces:
| Target margin | Markup needed | Price on $22.00 cost |
|---|---|---|
| 30% | 42.9% | $31.43 |
| 40% | 66.7% | $36.67 |
| 45% | 81.8% | $40.00 |
| 50% | 100.0% | $44.00 |
| 60% | 150.0% | $55.00 |
Notice how fast the markup climbs as the margin rises. Each extra point of margin costs more markup than the last, which leads straight to the limit below.
Why a 100% margin is impossible
A 100% margin would mean the whole selling price is profit, which only happens if the product cost nothing. As long as a unit costs something, part of every price goes to cover it, so the margin stays below 100%.
The formula shows the same thing. Price = cost ÷ (1 minus margin), and at a 100% margin that is cost ÷ 0, which has no answer. Get close and the price runs away: on a $22.00 cost, a 90% margin needs a $220.00 price, 95% needs $440.00, and 99% needs $2,200.00. That is why the calculator refuses a margin of 100% or more.
Markup has no such ceiling, because it divides by cost rather than price. A 500% markup on $22.00 is a $132.00 price, and even that is only an 83.3% margin. When a supplier or a rep talks about “200% margins”, they almost always mean markup.
Where wholesale margin quietly leaks
Knowing the formulas is half of it. These are the three places a planned margin most often shrinks without anyone deciding it should:
- Applying the margin as a markup. Pricing the $22.00 unit at cost plus 45% gives $31.90, which is only a 31.0% margin, not 45%. The price to keep 45% is $40.00.
- Discounts come off the price, not the markup. Give a trade customer 10% off the $40.00 price and they pay $36.00. Your profit falls from $18.00 to $14.00, and the margin drops from 45% to 38.9%.
- A cost that leaves things out. Work the margin from the bare $18.00 invoice cost and it looks bigger than it is. Overhead, freight and duty belong in the unit cost first.
If what you need is the price itself, built up from cost and overhead with a keystone RRP, the wholesale price calculator page walks through that. If you already have a price and want the margin it gives, the gross margin calculator goes in that direction. The guide to wholesale pricing covers the wider strategy.
How Qoblex helps you keep margin honest
A margin is only as reliable as the cost under it and the price that actually reaches the invoice. The calculator helps you plan both; Qoblex keeps them true once orders are flowing.
Qoblex recalculates unit cost the moment goods are received, and every sale posts cost of goods sold at the current cost, so gross margin reflects what the goods cost on the day they shipped, not a month-end estimate. Freight, duty and other charges on a purchase order are allocated across its line items by value, raising the landed unit cost before costing sees it. Reports then read from that number: the Products tab of the Sales reports shows cost of goods sold, margin and margin percentage for each product. See inventory costing for the detail.
For the price side, Qoblex’s B2B portal assigns price lists per customer or per customer group, in any supported currency, with their own discount and payment terms, and the price on screen is the price that ends up on the invoice. For current plans, see qoblex.com/pricing.
FAQ
What is the difference between margin and markup? Both are based on the same profit per unit. Margin divides that profit by the selling price; markup divides it by the cost. At a $22.00 cost and a $40.00 price, the $18.00 profit is a 45% margin and an 81.8% markup.
How do I convert markup to margin? Margin = markup ÷ (1 + markup). A 50% markup is 0.5 ÷ 1.5 = 33.3% margin, and a 100% markup is a 50% margin. To go the other way, markup = margin ÷ (1 minus margin), so a 45% margin is an 81.8% markup.
Is a 50% markup the same as a 50% margin? No. A 50% markup is only a 33.3% margin. On a $22.00 cost, a 50% markup gives a $33.00 price, while a 50% margin needs a $44.00 price, which is a 100% markup.
Why can a margin never reach 100%? A 100% margin would mean the whole price is profit, which is only possible if the product cost nothing. The formula price = cost ÷ (1 minus margin) divides by zero at 100%, and near it the price runs away: a $22.00 cost needs $2,200.00 for a 99% margin. Markup has no ceiling because it divides by cost.
What is a good wholesale margin? There is no single number, because it depends on your costs, your category and what your retailers need to make on top. A useful check is to work backwards from the retail price: at keystone, a $40.00 wholesale price gives an $80.00 RRP, and the retailer keeps 50%. If the retail price that results is more than shoppers will pay, the margin you are asking for, or the cost under it, needs another look.
Does Qoblex show my margin by product? Qoblex posts cost of goods sold at the current unit cost on every sale, with freight and duty allocated into that cost, and the Products tab of its Sales reports shows cost of goods sold, margin and margin percentage for each product. The target margin is still yours to set; this calculator helps you choose it.