Markup and margin calculator
Enter your cost and either a markup or a margin, and the calculator returns the selling price, the other number and your profit per unit. Add a markdown to see what a price cut does to both.
Markup and margin are not the same number
Both describe the profit on a unit, but against different bases. Markup divides profit by cost. Margin divides profit by price. A product that costs 20 dollars and sells for 30 dollars earns 10 dollars: that is a 50 percent markup, because 10 is half of 20, and a 33.3 percent margin, because 10 is a third of 30. Confusing them is the most common pricing slip, and it always errs the same way. Someone who wants a 50 percent margin and adds a 50 percent markup lands at 33.3 percent.
Shopify's own reports use margin. Its analytics fields define gross margin as gross profit divided by net sales, so the figure you see in your admin is the margin number, not the markup.
Pricing from a target
If you know your cost and the markup you want, the price is cost times one plus the markup. If you know the margin you want, the price is cost divided by one minus the margin. For a 20 dollar cost and a 40 percent margin the price is 20 ÷ 0.6, or 33.33 dollars, which is a 66.7 percent markup. The select box in the calculator switches between the two so you can start from the number your supplier, reseller or finance person uses.
The calculator uses the cost you type, so build your true unit cost first: product, packaging, the shipping you absorb and payment fees. The discount floors guide shows how to put those into one floor price before you set the margin.
What a markdown does to both
A markdown is a price cut, and it hits margin harder than it looks. With a 20 dollar cost and a 50 percent markup the price is 30 dollars. A 20 percent markdown takes it to 24 dollars, which is a 20 percent markup and a 16.7 percent margin. A fifth off the price removed more than half of the profit, from 10 dollars to 4.
That is why a promotion should start from the margin you can afford to lose, not from the discount that looks attractive. Run the markdown field at the depth you are considering, and when the margin after it falls under your own floor, shrink the cut or use a gift that does not scale with price.
How the math works
Price = cost × (1 + markup) = cost ÷ (1 − margin). Markup = margin ÷ (1 − margin); margin = markup ÷ (1 + markup). After a markdown d, price = price × (1 − d).
- Markup is profit as a share of cost; margin is profit as a share of price. The same price has a larger markup than margin, so the two are never interchangeable.
- Cost means what you enter. Add packaging, absorbed shipping and fees to it if you want them in the margin.
- A markdown is a cut off the price you computed, the way a percent-off discount works, not a cut off cost.
The derivation, with worked examples, is in Discount Floors So Promos Never Lose Money. Every figure the calculator shows comes from the numbers you type; nothing is a benchmark.
Questions about this calculator
What is the difference between markup and margin?
Markup is profit divided by cost, and margin is profit divided by price. A 20 dollar item sold for 30 dollars has a 50 percent markup and a 33.3 percent margin on the same 10 dollars of profit.
How do I turn a markup into a margin?
Divide the markup by one plus the markup. A 50 percent markup gives 0.5 ÷ 1.5, or 33.3 percent. To go the other way, divide the margin by one minus the margin: 0.333 ÷ 0.667 is 0.5, the 50 percent markup.
How do I price a product for a target margin?
Divide your unit cost by one minus the margin you want. For a 20 dollar cost and a 40 percent margin, 20 ÷ 0.6 is 33.33 dollars. Include packaging, absorbed shipping and fees in the cost.
What is a markdown, and how does it change my margin?
A markdown is a cut to the selling price. Cost stays the same, so the cut comes entirely out of profit. A 20 percent markdown on a 30 dollar item with a 20 dollar cost drops the margin from 33.3 percent to 16.7 percent.
Which margin does Shopify report?
Shopify's analytics fields define gross margin as gross profit divided by net sales, a share of sales, not of cost. It needs a cost per item on your products to work, so enter costs in the admin.
Related reading
Sources
- Shopify Help Center: Analytics fields (accessed November 1, 2026)
- Shopify Help Center: Profit reports (accessed October 10, 2026)