Margin and markup are the two ways to express profit on a sale, and mixing them up misprices products. Gross margin is profit as a share of the selling price; markup is the same profit as a share of the cost. This calculator shows both at once. In Margin mode enter the cost and the sale price to get profit, margin and markup; in Markup mode enter the cost and a markup percent to get the sale price and the margin it produces.
How to Calculate Margin and Markup
Two inputs, and both percentages plus the profit.
1
Pick a mode
Choose Margin to work from cost and sale price, or Markup to work from cost and a markup percentage.
2
Enter your numbers
Type the cost, then either the revenue (Margin mode) or the markup percent (Markup mode).
3
Read both percentages
See the gross margin, the markup, the profit and the sale price together — so you never confuse margin with markup.
Margin vs Markup — Same Profit, Different Base
The confusion that quietly misprices products.
The single most common pricing mistake is treating margin and markup as the same number. They measure the same profit against different denominators: margin divides profit by the selling price, markup divides it by the cost. Because the cost is smaller than the price, markup is always the larger-looking percentage for the same deal.
Take a $60 item sold for $100. The $40 profit is a 40% margin (40 ÷ 100) but a 66.7% markup (40 ÷ 60). If you meant to earn a 40% margin but applied a 40% markup instead, you would price the item at just $84 and quietly give away part of your profit on every sale. Margin also has a hard ceiling of 100% — profit can never exceed the price — while markup can run to any figure. Seeing both, as this calculator shows them, is the simplest way to keep a pricing rule honest.
Frequently Asked Questions
What is the difference between margin and markup?
Margin and markup describe the same profit from two different bases, which is why they are so easily confused. Gross margin is the profit as a percentage of the selling price — profit divided by revenue — so it can never exceed 100%. Markup is the same profit as a percentage of the cost — profit divided by cost — and it has no upper limit. Take an item that costs $60 and sells for $100: the profit is $40, which is a 40% margin (40 ÷ 100) but a 66.7% markup (40 ÷ 60). Because markup is always the larger-looking number for the same profit, quoting one when you mean the other can badly misprice a product. This calculator shows both at once so you never mix them up.
How do I calculate gross profit margin?
Gross profit margin is profit divided by revenue, expressed as a percentage: margin % = (revenue − cost) ÷ revenue × 100. Subtract the cost of the item from the price you sell it for to get the gross profit, then divide that profit by the selling price and multiply by 100. For example, a product that costs $60 and sells for $100 has a $40 gross profit and a 40% margin, because 40 divided by 100 is 0.40. In the Margin mode of this calculator you simply enter the cost and the revenue, and it returns the profit, the gross margin and the equivalent markup instantly. Gross margin is the figure most businesses track because it tells you what share of each sale you keep before overheads.
How do I set a price from a markup percentage?
To mark a cost up by a percentage, multiply the cost by one plus the markup as a decimal: price = cost × (1 + markup ÷ 100). A $60 item marked up 50% sells for $60 × 1.5 = $90, giving a $30 profit. Switch to the Markup mode of this calculator, enter the cost and the markup percent, and it returns the sale price along with the profit and the resulting gross margin — useful when your pricing rule is expressed as a markup but you also want to know the margin it produces. Retailers often price from a standard markup, then check the margin to make sure it covers their costs; seeing both numbers side by side keeps the two from being confused.
Can margin be more than 100%?
No — gross margin cannot exceed 100%, because it is profit as a share of the selling price, and profit can never be more than the whole price. The closer the cost gets to zero, the closer the margin approaches 100%, but it can only reach it in the impossible case of a product that costs nothing. Markup, on the other hand, has no ceiling: a $10 item sold for $50 is a 400% markup but only an 80% margin. If a calculator or a supplier quotes you a margin above 100%, they are almost certainly quoting markup by mistake — a common error this tool helps you catch by always showing both figures for the same numbers.
Is this gross margin or net margin?
This calculator measures gross margin, which compares the selling price only to the direct cost of the item, not to your total business costs. Gross margin tells you how much of each sale is left after paying for the product itself, before rent, wages, marketing, taxes and other overheads. Net margin goes further, subtracting all of those operating costs from revenue, and is always lower than gross margin. Use gross margin, which is what this calculator returns, for pricing individual products and comparing product lines; use net margin, worked out from a full profit-and-loss statement, to judge the profitability of the whole business. Healthy gross margins vary widely by industry, so compare against peers in your field rather than a universal target.
How do I convert markup to margin or margin to markup?
The two convert with simple formulas: margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin), using the percentages as decimals. A 50% markup equals a 33.3% margin, because 0.5 ÷ 1.5 is 0.333; a 40% margin equals a 66.7% markup, because 0.4 ÷ 0.6 is 0.667. You rarely need to do this by hand with this calculator, though — enter your numbers in either mode and it displays the margin and the markup together, so the conversion is done for you. Keeping a feel for the relationship is still useful: for the same profit, markup is always the bigger percentage, and the two only converge near zero.