How it works

A useful distinction

A target margin is not guaranteed profit

At cost 60 and selling price 100, product margin is 40%. If 10 in shipping and fees was omitted from cost, the all-in margin is only 30%; decide which costs your comparison includes before solving price.

Distinguishing profit margin from markup

An item that costs 80 and sells for 100 earns 20 before other costs. Its margin is 20 ÷ 100 = 20%, while its markup is 20 ÷ 80 = 25%. To achieve a 30% margin on a cost of 80, divide 80 by 0.70 to get approximately 114.29; adding 30% to cost would give only 104. Include the costs you intend the margin to cover. Stock and foreign-exchange margin modes calculate collateral requirements, a different use of the word margin.

Calculate: formula and assumptions

Margin = profit/selling price. Markup = profit/cost.

Enter amounts in the same currency. Tax and commission rules can vary by contract and jurisdiction.

Cost or price from margin: formula and assumptions

Price=cost/(1−margin); cost=price×(1−margin).

Margin is profit divided by selling price; it differs from markup.

Stock margin account: formula and assumptions

Borrowing=purchase value×(1−initial margin); call price=borrowing/[shares×(1−maintenance margin)].

A simplified long-stock model without interest, dividends, or broker-specific requirements.

Foreign-exchange margin: formula and assumptions

Required margin=position units×quote price×account conversion/leverage.

Exchange rates are supplied by you. Broker and instrument rules may differ.

Profit amount & margin comparison: formula and assumptions

Profit = revenue − cost; margin = profit/revenue; markup = profit/cost.

Margin is undefined at zero revenue, and markup is undefined at zero cost. Inverse profit/margin needs a positive margin.

Worked example

Reference example currency: USD. These fixed examples do not change with your calculator preferences.

Using the Calculate example:

Inputs

Cost ($): 80
Selling price ($): 100

Method

Margin = profit/selling price. Markup = profit/cost.

Result

Example result

Profit: $20.00

Profit margin: 20%

Markup: 25%

These are illustrative inputs. Change the values to explore a different scenario.

Formula references

References explain the underlying methods; they do not imply endorsement or individual professional review of Finflo.

Common questions

Why are margin and markup different percentages?

Margin divides profit by revenue; markup divides profit by cost. The profit-and-margin inverse requires positive profit and positive margin in this model.

Do the stock and FX modes apply my broker’s exact requirements?

No. They use entered ratios, leverage and exchange rates. Broker rules, financing charges and instrument requirements can differ.

Prepared by Finflo. See our methodology and editorial policy. Read the relevant professional-advice limitations.

Margin Calculator

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