Profit Margin & Markup Calculator

Margin and markup both describe the gap between what a product costs you and what you sell it for, but they measure that gap against different numbers. Margin measures profit as a share of the selling price. Markup measures the same profit as a share of the cost. Because the price is always larger than the cost on a profitable sale, the margin percentage is always smaller than the markup percentage for the same dollar of profit. The table below lines the two up so you can read one off the other.

Gross profit margin is your profit divided by your selling price, written as a percentage. First find the profit: selling price minus unit cost. Then divide that profit by the selling price and multiply by 100. If a product costs you 60 dollars and sells for 100 dollars, the profit is 40 dollars. Divide 40 by 100 and you get 0.4, or a 40 percent gross margin. Gross margin answers one question: out of every dollar a customer pays you, how many cents do you keep before overhead.

Markup is your profit divided by your unit cost, written as a percentage. Take the same profit, selling price minus cost, and divide it by the cost instead of the price. Using the same numbers, a 40 dollar profit divided by a 60 dollar cost is 0.667, or a 66.67 percent markup. The same sale is a 40 percent margin and a 66.67 percent markup at the same time. Neither is wrong; they describe the deal from opposite ends.

Most pricing decisions run in reverse: you know your cost and the margin you want, and you need the price. To hit a target margin, divide your cost by one minus the margin written as a decimal. For a 40 percent margin on a 60 dollar cost, divide 60 by 0.6 to get a 100 dollar price. To price from a target markup instead, multiply the cost by one plus the markup as a decimal. A 50 percent markup on a 60 dollar cost is 60 times 1.5, or 90 dollars. Switch the calculator to the matching mode and it does this for you. After you set a price from a markup, check the margin it produces, because that margin is what actually lands in your pocket.

The costly mistake is treating a markup number as if it were a margin. A shop that wants a 40 percent margin but marks up cost by 40 percent ends up with only a 28.57 percent margin and quietly loses profit on every sale. A second mistake is treating gross margin as take-home profit; gross margin sits before rent, wages, software, shipping, fees, and taxes. A third mistake is pricing off a rounded number: round the price only at the very end, because rounding the cost or the percentage first can move the result more than you expect.

Gross margin counts only the direct cost of the thing you sold. Net margin counts everything else too: overhead, salaries, marketing, interest, and taxes. This calculator works in gross terms, because gross margin is the number you control directly at the moment you set a price. Net margin is the number you judge the whole business by at the end of the period. Use gross margin to price a single product, and track net margin separately to see whether the business as a whole is profitable. Working out the sales volume that covers your fixed costs is a break-even question, which builds on contribution margin rather than the simple gross margin here.

Example one, from cost and price. A retailer buys a mug for 6 dollars and sells it for 10 dollars. The profit is 10 minus 6, which is 4 dollars. The margin is 4 divided by 10, which is 40 percent. The markup is 4 divided by 6, which is 66.67 percent. Same mug, two percentages.

Example two, from a target margin. A maker wants a 45 percent margin on an item that costs 22 dollars. Divide 22 by one minus 0.45, that is 22 divided by 0.55, which gives a price of 40 dollars. Check the markup: the 18 dollar profit divided by the 22 dollar cost is 81.82 percent. The maker charges 40 dollars, keeps 45 percent of each sale as gross margin, and can describe that as an 81.82 percent markup.

A few situations trip people up. A margin can never reach 100 percent while your cost is above zero, because that would require selling at an infinite price; the calculator flags a 100 percent margin target as invalid rather than returning a broken number. A markup has no ceiling: pricing at double your cost is a 100 percent markup, and pricing at triple your cost is 200 percent. Selling below cost produces a negative margin and a negative markup, which the calculator shows as a loss rather than an error. Selling exactly at cost is break-even: zero profit, zero margin, zero markup. Margin and markup are not symmetric, so you can never convert one to the other by simple subtraction; use the calculator or the table above.

This calculator reports gross figures only. It does not account for overhead, labor, taxes, shipping, payment processing fees, returns, or discounts, and it is not a substitute for professional financial advice. Results assume a single product at one cost and one price. Margin and markup are standard accounting definitions and do not change over time. Last reviewed: August 4, 2026.