Calculate selling price from cost and markup percentage or find the markup applied to reach a selling price with margin comparison.
Translate between unit cost, selling price, markup on cost, and margin on sales. In the forward direction, enter cost and markup percentage to obtain the selling price and compare that markup with the resulting gross margin. In the reverse direction, enter cost and selling price to determine the markup that was applied. The common trap is treating markup and margin as interchangeable percentages: markup divides profit by cost, while margin divides the same profit by selling price, so their percentages differ whenever profit is nonzero.
A concrete input and expected output from the current implementation.
Input
Cost: $80; markup: 25%
Expected output
Selling price: $100; markup: 25%; margin: 20%.
A 25% markup adds 0.25 x $80 = $20 to cost, producing $100. The margin uses selling price as its denominator, so it is $20 / $100 = 20%, not 25%.
With cost C and markup rate r written as a decimal, selling price is C x (1 + r). The price-cost spread is C x r. To make the margin comparison, divide that spread by selling price: (selling price - C) / selling price x 100%. For positive cost and markup, the reported margin is lower than markup.
When cost and selling price are supplied, the applied markup is (selling price - cost) / cost x 100%. Margin is calculated from the same difference but divides by selling price. For a nonzero cost, a sale at that cost gives 0% markup and 0% margin. The two percentages describe the same price spread from different bases.
No. On an $80 cost, 25% markup creates a $100 price and $20 price-cost difference, so margin is only 20%. To obtain a 25% margin from an $80 cost, divide $80 by 1 - 0.25, giving $106.67 after rounding. The equivalent markup is about 33.33%.
No. It compares selling price with the cost entered. Net profit requires operating expenses, financing costs, taxes, returns, and other items outside this calculation. Even the price-cost difference represents gross profit only when the cost figure includes every cost that the accounting method assigns to the item.
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