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Finance

Margin Calculator

Find your gross margin and markup from cost and selling price, or work backwards from a target margin to the price you need to charge.

I know the…
$
What the item costs you to buy or make.
$
What the customer pays, before sales tax.

Results

Gross margin40%
Gross profit$40.00
Markup66.67%
Selling price split
  • Cost $60.00 60%
  • Profit $40.00 40%
Cost
$60.00
Selling price
$100.00
Gross margin
40%
Markup
66.67%

How it works

  1. Choose what you know: the selling price, a target margin, or the markup you apply.
  2. Enter your cost per unit.
  3. Enter the price, margin or markup — results update as you type.

Formula

Gross margin = (Price − Cost) ÷ Price × 100
Markup = (Price − Cost) ÷ Cost × 100
Price = Cost ÷ (1 − Margin ÷ 100)
Price = Cost × (1 + Markup ÷ 100)

Margin is profit as a share of the selling price; markup is profit as a share of the cost. The same profit always gives a smaller margin than markup.

Example

A shop buys a product for $42 and sells it for $70.

Inputs

I know the…
Cost & price
Cost per unit
$42
Selling price
$70

Result

Gross margin40%
Gross profit$28.00
Markup66.67%
Load this example into the calculator →

Margin vs. markup

If an item costs $60 and sells for $100, the $40 profit is a 40% margin (40 ÷ 100) but a 66.7% markup (40 ÷ 60). Confusing the two is one of the most common pricing mistakes: adding a 40% markup to cost only produces a 28.6% margin.

Frequently asked questions

What is a good profit margin?

It varies widely by industry. Grocery retail often runs on single-digit gross margins, while software and luxury goods can exceed 70%. Compare against businesses like yours.

Is gross margin the same as net margin?

No. Gross margin only subtracts the direct cost of the product. Net margin also subtracts operating expenses, interest and taxes.

How do I convert markup to margin?

Margin = Markup ÷ (1 + Markup), using decimals. For example, a 50% markup (0.5) equals a 33.3% margin.

Can the margin be 100%?

Only if the cost is zero. For any positive cost the margin is below 100%, which is why target margins must be less than 100%.