Margin Calculator

Calculate profit margin and markup percentage

Last reviewed: July 2026How we build & verifyEstimate only. Verify important decisions with a qualified professional

Cost

Revenue / Selling Price

Profit

$0.00

Margin

0.00%

Markup

0.00%

Cost/Revenue Ratio

—

How it works

Converts between cost, selling price, profit margin, and markup. Margin and markup are computed from different bases, and confusing the two is one of the most expensive mistakes in retail pricing.

Formula

Margin % = (Price − Cost) / Price × 100
Markup % = (Price − Cost) / Cost × 100
Price for a target margin = Cost / (1 − Margin)

Variables

Costcost of goods sold for the item
Priceselling price
Marginprofit as a share of the selling price
Markupprofit as a share of the cost

Worked example

Inputs: Item costing $40, sold for $64

Profit: 64 − 40 = 24
Margin: 24 / 64 = 37.5%
Markup: 24 / 40 = 60%
To instead hit a 35% margin: 40 / (1 − 0.35) = 61.54

Result: 37.5% margin, 60% markup on the same $24 of profit

Notes

Markup is always the larger number. A 50% markup is a 33.3% margin; a 100% markup is a 50% margin. Applying a 40% markup when you promised a 40% margin loses you a third of the intended profit.
Gross margin covers only cost of goods. Payment processing, shipping, returns, and platform fees all sit below it and can consume the whole thing on low-priced items.
A 40% margin cannot exist on a 45% discount. Cap promotional depth at whatever leaves the contribution margin positive.
Margin above 100% is impossible by definition, since profit cannot exceed the selling price. Markup has no upper bound.

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Frequently Asked Questions

Profit margin is the percentage of revenue that exceeds the cost. Gross margin = ((Revenue minus Cost) / Revenue) × 100. A 40% margin means $0.40 of every dollar is profit.

Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A $60 cost sold for $100 has a 40% margin but a 66.7% markup.

It varies by industry. Software companies often achieve 60-80% gross margins, while retail typically sees 25-50%. Net profit margins of 10-20% are generally considered healthy.

How it works

Converts between cost, selling price, profit margin, and markup. Margin and markup are computed from different bases, and confusing the two is one of the most expensive mistakes in retail pricing.

Formula

Margin % = (Price − Cost) / Price × 100
Markup % = (Price − Cost) / Cost × 100
Price for a target margin = Cost / (1 − Margin)

Variables

Costcost of goods sold for the item
Priceselling price
Marginprofit as a share of the selling price
Markupprofit as a share of the cost

Worked example

Inputs: Item costing $40, sold for $64

Profit: 64 − 40 = 24
Margin: 24 / 64 = 37.5%
Markup: 24 / 40 = 60%
To instead hit a 35% margin: 40 / (1 − 0.35) = 61.54

Result: 37.5% margin, 60% markup on the same $24 of profit

Notes

Markup is always the larger number. A 50% markup is a 33.3% margin; a 100% markup is a 50% margin. Applying a 40% markup when you promised a 40% margin loses you a third of the intended profit.
Gross margin covers only cost of goods. Payment processing, shipping, returns, and platform fees all sit below it and can consume the whole thing on low-priced items.
A 40% margin cannot exist on a 45% discount. Cap promotional depth at whatever leaves the contribution margin positive.
Margin above 100% is impossible by definition, since profit cannot exceed the selling price. Markup has no upper bound.

Margin Calculator

How it works

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Frequently Asked Questions

Margin Calculator

How it works

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Frequently Asked Questions