Margin Calculator
Profit margin & markup calculator
Margin vs Markup Reference
| Margin | Markup | Example ($100 cost) |
|---|---|---|
| 15% | 17.6% | $117.65 |
| 20% | 25% | $125.00 |
| 25% | 33.3% | $133.33 |
| 30% | 42.9% | $142.86 |
| 40% | 66.7% | $166.67 |
| 50% | 100% | $200.00 |
Margin vs Markup: The Key Difference
How to Use the Margin Calculator
The margin calculator helps business owners and pricing professionals calculate profit margins, markups, and selling prices instantly. Whether you're setting retail prices, analyzing product profitability, or comparing margins across your product line, this tool provides accurate calculations with step-by-step breakdowns.
Understanding Profit Margin
Profit margin represents the percentage of revenue that becomes profit after subtracting costs. The formula is: Margin = ((Revenue - Cost) / Revenue) × 100. For example, if you sell a product for $100 that costs $60, your margin is 40%. This differs from markup, which is calculated based on cost, not revenue.
Gross Margin vs. Net Margin
Gross margin considers only direct product costs (COGS), while net margin factors in all operating expenses, taxes, and overhead. This calculator focuses on gross margin, which is essential for pricing decisions. For a complete financial picture, consider using our break-even calculator alongside this tool.
The Margin vs. Markup Confusion
Many business owners confuse margin and markup. A 50% markup does NOT equal a 50% margin. If you mark up a $100 item by 50%, the selling price is $150, but the margin is only 33.3% (not 50%). Use our margin vs markup converter to easily convert between these metrics.
Industry Margin Benchmarks
- Retail: 25-50% gross margin typical
- Restaurants: 60-70% food cost (30-40% margin)
- Software: 70-90% gross margin
- Grocery: 1-3% net margin
Related Calculators
For pricing strategy, also use our markup calculator and discount calculator. Planning your business? Check out the ROI calculator.
Frequently Asked Questions
Margin is profit as a percentage of selling price: (Price - Cost) / Price × 100. Markup is profit as a percentage of cost: (Price - Cost) / Cost × 100. A 50% markup equals only a 33.3% margin. They measure the same profit differently.
Profit margin = ((Selling Price - Cost) / Selling Price) × 100. For example, selling a $60 product for $100 gives a margin of ($100-$60)/$100 × 100 = 40%. This means 40% of revenue is gross profit.
Good gross margins vary by industry. Retail typically targets 25-50%, restaurants aim for 30-40% on food, software can achieve 70-90%, and grocery operates on thin 1-3% net margins. Compare to your industry benchmarks.
Selling Price = Cost / (1 - Margin/100). For a $60 item with a target 40% margin: $60 / (1 - 0.40) = $60 / 0.60 = $100 selling price.
Gross margin subtracts only direct product costs (COGS) from revenue. Net margin subtracts ALL costs including overhead, salaries, rent, and taxes. Net margin is always lower and shows actual profitability.
Margin shows what percentage of each dollar earned is profit, making it easier to compare profitability across products and against industry benchmarks. Financial statements report margins, and investors expect margin metrics.
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