What’s the difference between markup and margin?
A 30% markup doesn’t mean you’re making a 30% margin.
Both measure the difference between your cost and selling price, but they use different starting points. Understanding that difference helps you price with a clearer picture of what’s left after direct costs.
Use this calculator to find a selling price that meets your target gross profit margin, or check the margin and markup on a price you already charge.
How to use it
Choose what you want to calculate, then enter your cost per item or job. Include relevant direct costs such as materials, purchase costs, freight and direct labour.
To find a selling price, enter your desired margin. To check an existing price, enter what you charge after any discounts.
If GST registered, use selling prices excluding GST and costs excluding recoverable GST. Otherwise, use the full amounts.
Understanding your result
Markup is gross profit expressed as a percentage of cost.
Margin is gross profit expressed as a percentage of selling price.
For example, something that costs $100 and sells for $130 makes $30 gross profit. That’s a 30% markup, but a 23.08% margin.
To achieve a 30% margin on a $100 cost, you need to charge at least $142.86.
Remember, gross profit still needs to cover overheads, tax and other business obligations. It isn’t all available to pay yourself.
What’s the difference between markup and margin?
Find a selling price that meets your target gross profit margin, or check the margin and markup on a price you already charge.
All money amounts are NZD per item or job. Use costs and prices for the same item or job. Boxes start at 0; cleared boxes count as 0.
Markup and margin use different starting points
Markup measures gross profit as a percentage of cost. Margin measures gross profit as a percentage of the selling price.
For example, an item costing $100 and selling for $130 has a $30 gross profit: a 30% markup, but a 23.08% margin. To achieve a 30% margin on a $100 cost, the selling price needs to be at least $142.86.
- Gross profit is not net profit: It still needs to cover overheads, tax and other business obligations. This calculator does not show take-home pay or cash available.
- Use consistent costs: Include direct costs once. If overhead recovery is included in your cost figure, interpret the result as a margin on that cost basis rather than your accounting gross margin.
- GST: For GST-registered businesses, use prices excluding GST and costs excluding recoverable GST. Otherwise use full amounts. This calculator does not add or calculate GST.
- Zero values: Margin cannot be calculated on a zero selling price; markup cannot be calculated on a zero cost. A target margin requires a positive cost and a margin below 100%.
- A pricing starting point: The result does not account for customer demand, competitors, volume discounts or the value you deliver. Review assumptions before changing your prices.
General planning guidance only, not personalised accounting, tax or financial advice.
Want to make sure your pricing adds up?
We can help you understand your costs, review your margins and explore pricing that supports your business and income goals.
Disclaimer: This calculator provides general planning guidance, not personalised accounting, tax or financial advice. Results depend on the costs entered and do not account for customer demand, competitors or the value you deliver. Review your assumptions before changing prices.