Enter your cost per unit and the one figure you already have: a markup, a margin or a price. The tool works out the other two as you type and shows a table of common markups with the margin each one really leaves. It is there so you never charge less than you think you do.
How it works
Profit per unit is always price minus cost. What changes is what you compare it with.
- Markup = (price − cost) ÷ cost. How much you add on top of what you spent.
- Margin = (price − cost) ÷ price. How much of each sale you keep.
- Price from a markup = cost × (1 + markup).
- Price from a margin = cost ÷ (1 − margin).
Type percentages the way you say them: 65 means 65%. If you switch mode, say from margin to markup, the tool converts the value so the price stays put.
Worked example: a brownie
You bake brownies for a coffee shop counter. You have worked out the loaded cost of one brownie at $1.20, covering chocolate, butter, sugar, eggs, flour, the paper case, your time and the oven. You want a 65% margin on each one.
| Step | Sum | Result |
|---|---|---|
| Price before tax | 1.20 ÷ (1 − 0.65) | $3.43 |
| Profit per brownie | 3.43 − 1.20 | $2.23 |
| Margin | 2.23 ÷ 3.43 | 65% |
| Markup | 2.23 ÷ 1.20 | 185.7% |
A 65% margin needs a markup of almost 186%. If you had simply added 65% to the cost, you would charge $1.98 and keep about 39% of each sale instead of 65%.
The table worth keeping by the till
The tool builds this table from your own cost. At $1.20 it reads:
| Markup | Margin | Price |
|---|---|---|
| 25% | 20% | $1.50 |
| 50% | 33.3% | $1.80 |
| 75% | 42.9% | $2.10 |
| 100% | 50% | $2.40 |
| 150% | 60% | $3.00 |
| 200% | 66.7% | $3.60 |
The row people get wrong most is 100%. "Double the cost" sounds like making 100%, but it leaves you half of each sale, and that half still has to cover rent, the gas you did not cost in and the brownies that did not sell.
The mistake of using a margin as a markup
You want to keep 40% of every sale, so you multiply the cost by 1.40. At $1.20 you charge $1.68, but your real margin is 0.48 ÷ 1.68 = 28.6%. For a true 40% margin the price is 1.20 ÷ 0.60 = $2.00. The guide to markup vs margin has more examples, and pricing for a target margin shows what to do when a delivery app commission or sales tax is in the way.
If you also sell to shops, look at how the margin is split between wholesale and retail prices. The margin you take in each channel is your call, but it has to cover your loaded cost in both. And if you set prices by adding a fixed amount to cost, the guide to cost-plus pricing shows where that works and where it falls short.
For the full cost of a product, with ingredients, packaging, your time and the gas, use the food cost calculator.
Frequently asked questions
What is the difference between markup and margin?
Both use the same profit in money, price minus cost. Markup divides it by the cost and margin divides it by the price. That is why a 100% markup is a 50% margin.
Can I have a 100% margin?
No. A 100% margin would mean the product cost you nothing, so the tool accepts margins from 0 up to just under 100%. Markup has no such limit and can go well past 100%.
Do these prices include sales tax?
No. Markup and margin are worked out on the price before tax, because the tax is not your money. Once you have the price, add your local sales tax if your prices include it.
Which cost should I enter?
Your loaded cost per unit: ingredients, packaging, your time, gas and waste. With ingredients alone the markup looks generous and the price comes out too low.