Built for ecommerce, not a schoolbook percentage problem. Markup, gross margin, price from a target margin, sale economics, and the maximum discount that still hits your numbers. Every result shows the arithmetic.
What the item cost you, and what you sell it for. Everything below updates as you type.
price = cost / (1 - margin / 100) = 40.00 / (1 - 50 / 100)
Set a discount off the regular price and see what is left once it ships.
Set the lowest margin you are willing to sell at, and this works out the biggest discount you can run off the regular price without going under it.
Working out a discount threshold for a real sale? OnVoard's AOV Progress Bar can show shoppers a live goal toward a discount tier at checkout, once you know the number.
Markup measures profit against what you paid. Margin measures profit against what the customer paid. They use the same profit figure and land on different percentages because they divide by different things, and mixing them up is the most common pricing mistake in ecommerce.
markup% = (price - cost) / cost x 100
Cost $40, price $80: (80 - 40) / 40 x 100 = 100% markup.
margin% = (price - cost) / price x 100
Same product: (80 - 40) / 80 x 100 = 50% margin. Same $40 of profit, a different percentage, because the denominator changed.
To hit a specific margin rather than a specific markup, solve the margin formula for price: price = cost / (1 - target margin / 100). Using the markup formula here by mistake (price = cost x (1 + margin / 100)) will always underprice the item, because it treats a margin percentage as if it were a markup percentage.
Pick the lowest margin you are willing to accept on a sale, then work out the floor price that still meets it with the same formula above. The maximum safe discount is the gap between your regular price and that floor price, shown as a percentage of the regular price. Discount past it and the sale is losing you margin faster than the extra volume can make up for.
No. Markup divides profit by cost; margin divides profit by price. A product costing $40 sold at $60 carries a 50% markup ($20 profit over a $40 cost) but only a 33.3% margin ($20 profit over a $60 price). The two only match at 0%.
price = cost / (1 - target margin / 100). Do not use price = cost x (1 + margin / 100); that formula is for markup, not margin, and it will overprice or underprice the item depending on which way you get it wrong.
Work out the lowest price that still meets the margin you are willing to accept (the floor price), then the maximum discount is the gap between your regular price and that floor, as a percentage of the regular price. The calculator above does this for any margin floor you set.
More free tools: compare email platform pricing or test a subject line, or see every free tool.
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