Margin Calculator
Calculate profit margin, markup, and gross profit.
Margin Insight
Remember, a 50% markup does not equal a 50% margin. Margin is always a percentage of the final sale price, while markup is based on the original cost.
Calculate Your Profitability
Enter your costs and final selling price to uncover your true margin and markup metrics.
Margin Calculator
Calculate profit margin, markup, and gross profit.
Margin vs. Markup
In business, both margin and markup use gross profit to describe profitability, but they are calculated differently. Understanding the distinction ensures you set the right prices to meet your financial goals.
Pricing Strategy
Knowing your margin helps determine your company's overall health, while markup is essential for day-to-day pricing items based on their wholesale cost.
Margin & Markup Calculation
Margin = (Profit / Revenue) × 100 | Markup = (Profit / Cost) × 100Margin is the ratio of gross profit to the selling price, showing how much of every dollar of revenue you keep. Markup is the ratio of gross profit to the cost, showing how much you've increased the item's price above its cost.
Practical Scenarios
Standard Retail Example
If an item costs you $60 and you sell it for $100, your gross profit is $40. Your markup is 66.67% ($40 / $60), but your true profit margin is 40% ($40 / $100).
Misunderstanding Markup vs Margin
A common mistake is assuming a 50% markup equals a 50% margin. Adding 50% to a $100 cost makes the price $150. Your profit is $50, which is only a 33.33% margin on the $150 revenue.