Margin Calculator
Gross margin, markup and profit from cost and price — or the selling price for a target margin — with the margin-vs-markup table that trips everyone up.
Margin Calculator: with the default inputs, result is 20.
What you pay for the item or to deliver the service (COGS).
Gross margin as a share of the selling price. Used in the price and cost modes.
Percentage added on top of cost. Used in the markup mode.
- In words
- Selling at $100.00 something that costs $80.00 gives a 20% margin (25% markup), $20.00 profit per unit.
- Gross margin
- 20%
- Markup
- 25%
- Gross profit per unit
- $20.00
- Selling price
- $100.00
- Cost
- $80.00
Assumptions
- Gross margin only — no overhead, tax or discounts.
- Cost means the full direct cost per unit, including freight in.
| Markup on cost | = Gross margin | $100 cost sells for |
|---|---|---|
| 10% | 9.1% | $110 |
| 15% | 13% | $115 |
| 20% | 16.7% | $120 |
| 25% | 20% | $125 |
| 30% | 23.1% | $130 |
| 33% | 25% | $133 |
| 40% | 28.6% | $140 |
| 50% | 33.3% | $150 |
| 60% | 37.5% | $160 |
| 75% | 42.9% | $175 |
| 100% | 50% | $200 |
| 150% | 60% | $250 |
| 200% | 66.7% | $300 |
| 300% | 75% | $400 |
Margin = markup ÷ (1 + markup). Markup = margin ÷ (1 − margin). Doubling the cost (100% markup) is a 50% margin — "keystone" pricing.
How this is worked out
The formula
Gross profit = price − cost Margin % = (price − cost) ÷ price × 100 Markup % = (price − cost) ÷ cost × 100 Price from margin = cost ÷ (1 − margin) Price from markup = cost × (1 + markup) Margin = markup ÷ (1 + markup)
Open How it’s calculated above to see this worked through with your own numbers.
What you enter
- What do you know?
- Choose one of 4 options.Cost and price → margin & markup · Cost and target margin → price · Price and target margin → cost · Cost and markup → price & margin
- Cost
- What you pay for the item or to deliver the service (COGS).in dollars · 0 or more · defaults to 80
- Selling price
- A number.in dollars · 0 or more · defaults to 100
- Target margin
- Gross margin as a share of the selling price. Used in the price and cost modes.a percentage · from 0 to 99.99 · defaults to 20
- Markup
- Percentage added on top of cost. Used in the markup mode.a percentage · 0 or more · defaults to 25
What you get back
- Resultmain answer
- In words
- Gross margin
- Markup
- Gross profit per unit
- Selling price
- Cost
What this assumes
- Gross margin only — no overhead, tax or discounts.
- Cost means the full direct cost per unit, including freight in.
About this calculator
Margin and markup describe the same dollars from opposite ends, and mixing them up is one of the most common — and expensive — pricing mistakes in small business. Markup is profit as a percentage of cost; margin is profit as a percentage of price. A product that costs $80 and sells for $100 has a 25% markup but only a 20% margin. Someone who wants a "30% margin" and adds 30% to cost ends up with 23% — a big gap across a year of sales.
How to use it
Pick what you know. Cost and price gives you margin, markup and unit profit. Cost and a target margin gives the price you need to charge — the mode to use when you're setting prices to hit a gross-margin goal. Price and a target margin tells you the most you can pay a supplier and still hit your number, which is the mode for negotiating purchases. Cost and markup is for shops that price by a multiplier ("cost times 2.2").
Margin vs. markup, in one table
The table below is the conversion every buyer and merchandiser eventually memorizes: 25% markup = 20% margin, 50% markup = 33% margin, 100% markup ("keystone") = 50% margin. Margins can never reach 100%; markups can be any size. The bigger the number, the wider the gap.
Which one to use
- Margin is what appears on your income statement (gross margin = gross profit ÷ revenue). Lenders, investors and industry benchmarks all speak in margin.
- Markup is convenient at the counter and in a spreadsheet of costs, because you multiply straight through.
If your accountant says the business needs a 35% gross margin to cover overhead, price at cost ÷ 0.65 — a 54% markup — not cost × 1.35.
What this calculator doesn't include
This is gross margin: price less the direct cost of the goods or the service. Rent, salaries, marketing and taxes come out afterwards; see the profit calculator for the full income-statement walk from revenue to net profit. Sales tax and VAT are also excluded — they're collected on top of the price and passed through, so they don't change your margin.
Frequently asked questions
▸What's the difference between margin and markup?
Margin divides profit by the selling price; markup divides it by cost. A $20 profit on an $80 cost is a 25% markup and a 20% margin ($20 of $100). Margin is always the smaller number.
▸How do I price for a target margin?
Divide cost by (1 − margin). For a 40% margin on a $30 cost: 30 ÷ 0.6 = $50. Adding 40% to cost would give $42 and only a 28.6% margin.
▸What is a good gross margin?
It depends entirely on the industry. Grocery runs 20–30%, restaurants 60–70% on food (before labor), retail apparel 50–60%, software 70–90%. Compare against your own sector, not a universal number.
▸Is a 50% margin the same as doubling the price?
Yes. Doubling cost is a 100% markup, which equals a 50% margin. Retailers call it keystone pricing.
▸Does margin include overhead?
Gross margin doesn't — it's price less direct cost only. Net margin subtracts everything (rent, payroll, marketing, interest, tax). A business can have a healthy gross margin and still lose money.
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