Margin and markup calculator
They are not the same number, and mixing them up is how a business prices itself into losing money on every sale. This shows both.
Work backwards from a margin you want
Margin and markup are not the same
This is the bit that costs people money.
Margin is profit as a share of the price. Markup is profit as a share of the cost. Buy at A$10 and sell at A$20 and you have a 100% markup - but only a 50% margin.
Someone told to hit "50%" who applies it as a markup instead of a margin charges A$15 rather than A$20, and quietly loses a third of the profit on every single sale.
The multiplier that actually gets you a margin is 1 ÷ (1 − the margin). For a 40% margin that is cost × 1.67, not × 1.4. For 50% it is double the cost. For 60% it is cost × 2.5. Most of the pricing mistakes we have seen are this one line.
What a discount really costs you
A 10% discount does not cost you 10% of the profit. It usually costs a quarter of it or more.
Buy at A$6 and sell at A$10 and you make A$4, a 40% margin. Knock 10% off and you sell at A$9 and make A$3. The price fell by a tenth; the profit fell by a quarter. To end the day with the same money in the till you now have to sell a third more units.
The thinner the margin, the worse it gets. On a 20% margin, a 10% discount halves the profit outright, and you need to sell twice as many to stand still.
The arithmetic is short enough to do in your head before you agree to anything: extra units needed = discount ÷ (margin − discount), both as percentages. Ten off a forty is 10 ÷ 30, a third more. Ten off a twenty is 10 ÷ 10, twice as many. Fifteen off a twenty is not a discount, it is a donation with delivery.
None of this says never discount. It says know the number before you offer one, because "we will make it up on volume" is a plan with a specific volume in it, and that volume is usually larger than anybody guesses.
Questions
What multiplier do I use to hit a margin I want?
One divided by one minus the margin. A 40% margin is cost times 1.67, a 50% margin is double the cost, a 60% margin is cost times 2.5. The calculator above does this for you if you put the margin you want into the last box, but the rule is worth knowing because it is the one people get wrong at the counter.
How much extra do I need to sell to cover a discount?
Discount divided by margin minus discount, both as percentages. Ten per cent off something with a forty per cent margin needs a third more units; ten per cent off a twenty per cent margin needs twice as many. Work it out before you agree to it rather than afterwards.
Should postage go in the cost or come off the price?
If you pay it, it reduces your profit either way - what matters is that it is in there somewhere. Charging postage separately means entering what you actually pay, not what you charge.
What margin should I be aiming for?
It varies enormously by trade, so anyone giving you one number is guessing. The useful exercise is knowing your real figure per product - most people are surprised which lines are carrying the business and which are barely paying for themselves.
Does this include GST?
No. Enter figures excluding GST. If you are registered for GST, GST is not your money and should not be in a profit calculation.
Know this for every product, not one at a time
StockRoom keeps cost and selling price separately against every item, so margin is a number you can see rather than one you work out on the back of an envelope.
Free up to 50 products, then A$9 a month.
Other free tools
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StockRoom plans at a glance
StockRoom is free for up to 50 products, then A$9 a month for 400, A$44 for 2,000 and A$89 for unlimited, from the plan list in the app, checked 8 October 2026.
| Plan | Products | Locations | Price a month |
|---|---|---|---|
| Free | Up to 50 | 1 | A$0 |
| Basic | Up to 400 | 1 | A$9 |
| Solo | Up to 2,000 | 5 | A$44 |
| Pro | Unlimited | Unlimited | A$89 |
Your whole team is included on every plan. Prices in Australian dollars. Source: the plan list in the StockRoom app, checked on .