How does the margin vs markup calculator work?
Borrowed from Accounting: Margin = (price - cost) / price; Markup = (price - cost) / cost
Markup is always larger than margin for the same product. Ad planning tools such as break-even ROAS need margin, not markup.
Worked example
A US seller pays $60 for a product and sells it at $100. Profit is $40, so margin = 40 ÷ 100 = 40% and markup = 40 ÷ 60 = 66.7%.
How should I read my result?
Low margin
Little room for ad spend. Raise price or cut costs before scaling ads.
Mid margin
Ads can work with a strong conversion rate. Track break-even ROAS.
High margin
Room for acquisition spend and testing.
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Questions about margin vs markup calculator
Which should I use to set price?
Many sellers set price with markup, but plan profit and ad budgets with margin.
Can markup exceed 100%?
Yes. A product costing $20 sold at $60 has a 200% markup and a 66.7% margin.
Can margin exceed 100%?
No. Margin cannot pass 100% because profit cannot exceed the selling price.