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Margin Calculator
Margin or markup? Mixing them up misprices your product. From a cost and one other figure, this profit margin calculator returns your gross margin, markup, profit and selling price — with margin and markup side by side so the difference stays obvious.
See how this works on a $60 item — 3 real examples
Gross profit margin
0%
Markup
0%
Profit
$0
Selling price
$0
Net profit
$0
Net margin
0%
Margin ↔ markup at a glance
| If your margin is | your markup is |
|---|---|
| 10% | 11.1% |
| 20% | 25.0% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100.0% |
How your margin and markup are calculated
Everything starts from the cost and one other figure. Profit is the gap between price and cost, and margin and markup express that same profit against two different bases:
profit = price − cost
margin % = 100 × profit / price
markup % = 100 × profit / cost
Because the price is the larger denominator, the margin is always the smaller of the two percentages. The two are directly interconvertible — the calculator usesmarkup % = 100 × margin / (100 − margin)and margin % = 100 × markup / (100 + markup), which is why a 40% margin is reported as exactly a 66.7% markup. When you enter a target margin the price is solved as cost / (1 − margin/100); a target markup gives cost × (1 + markup/100). Margin must stay under 100% because a 100% margin would require an infinite price. If you add optional operating expenses, net profit is profit − expensesand net margin is that net profit over the selling price. These are pure arithmetic definitions — no tax, currency rounding, or accounting assumptions are baked in.
A $60 item, and one classic pricing mistake
The same $60 cost priced three ways. One of them is what a “40% target” usually turns into by accident.
The target: a true 40% margin
gross margin40.0%
- At a $100 selling price, the $40 of profit is 40% of the price — the margin.
- Measured against the $60 cost instead, that same $40 reads as a 66.7% markup.
- Margin and markup are one profit with two denominators, which is why they never match.
To hit a 40% margin, the price is cost divided by 0.60 — not cost times 1.40.
Load this example (opens in a new tab)The mistake: cost marked up by 40%
gross margin28.6%
- Multiplying the $60 cost by 1.40 prices the item at $84, not $100.
- Profit falls to $24, and the margin lands at 28.6% — 11.4 points short of the target.
- Sixteen dollars of profit per unit quietly disappears compared with the true 40% price.
A “40% markup” and a “40% margin” differ by $16 of profit on every single sale.
Load this example (opens in a new tab)The fuller story: $15 of costs per unit
net margin25.0%
- Shipping, fees and overhead of $15 come out of the $40 gross profit.
- Net profit is $25 per unit, and the 40% gross margin shrinks to a 25% net margin.
- More than a third of the gross profit never reaches the bottom line.
The price did not change and neither did the cost of goods — only the honesty of the measure.
Load this example (opens in a new tab)Illustrations only, not financial advice. Your own rate, taxes and insurance will differ — check with a qualified financial advisor before acting on any of this.
Margin vs markup, in plain English
- Margin is out of price, markup is out of cost. Same profit, different denominator — which is why markup always looks like the bigger, more flattering number.
- Price from a target margin. Divide cost by (1 − margin): a $60 item at a 40% target margin should sell for $100, not $60 × 1.40.
- Never markup by your margin. Marking a $60 cost up by "40%" gives $84 and only a 28.6% margin — a classic pricing mistake this gross profit margin calculator prevents.
- Net margin tells the fuller story. Add shipping, fees and overhead as operating expenses to see what actually lands on the bottom line.
- Compare products by margin, not dollars. A percentage puts a $5 accessory and a $500 appliance on the same footing.
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Frequently asked questions
What is the difference between margin and markup?
Both measure the same profit, but against different bases. Gross margin is profit as a percentage of the selling price (profit ÷ price), while markup is profit as a percentage of the cost (profit ÷ cost). Because the selling price is always larger than the cost, the markup number is always bigger: a $40 profit on a $60 item that sells for $100 is a 40% margin but a 66.7% markup — the same dollars, two different rates.
How do I calculate gross profit margin from cost and selling price?
Subtract cost from price to get profit, then divide by the price and multiply by 100. For a $60 cost and a $100 selling price, profit is $40, so the gross profit margin is 40 ÷ 100 × 100 = 40%. Leave the mode on "Selling price" above and the gross margin calculator does this instantly.
How do I find the selling price for a target profit margin?
Switch the "I know the…" toggle to Margin % and enter your desired margin. The selling price is cost ÷ (1 − margin/100). To hit a 40% margin on a $60 item you would price it at 60 ÷ 0.60 = $100. That makes this a selling price calculator as well as a margin calculator.
How do I convert a markup percentage to a margin percentage?
Margin = markup ÷ (1 + markup/100). A 66.7% markup converts to a 40% margin; a 25% markup is a 20% margin; a 100% markup (doubling the price) is a 50% margin. This markup vs margin calculator shows both figures at once, so you never have to convert by hand.
How do I price for a 20% or 30% profit margin?
Divide the cost by (1 minus the margin). For a 20% margin, price = cost ÷ 0.80, so a $50 item sells for $62.50. For a 30% margin, price = cost ÷ 0.70, so the same $50 item sells for about $71.43. A 20% margin equals a 25% markup and a 30% margin equals a 42.9% markup.
Is profit margin the same as profit?
No. Profit is a dollar amount — price minus cost — while margin is that profit expressed as a percentage of the selling price. A $40 profit could be a great 40% margin on a $100 sale or a thin 4% margin on a $1,000 sale. Margin lets you compare products of very different prices on equal footing.
Disclaimer: these calculators are educational tools, not financial advice. They model your inputs with published formulas, but they cannot know your full situation — for decisions with real stakes, talk to a qualified professional. Formulas and defaults last reviewed .