Business
Margin Calculator
Enter what an item costs you and what you sell it for.
The formula
profit = price − cost
margin % = profit ÷ price × 100
markup % = profit ÷ cost × 100
Worked example
An item costing $60, sold at $100
- 100 − 60 = 40 profit
- 40 ÷ 100 = 40% margin
- 40 ÷ 60 = 66.7% markup
Where this goes wrong
Confusing margin with markup
Margin is profit as a share of the selling price; markup is profit as a share of the cost. Buy at $60 and sell at $100 and that is a 40% margin but a 67% markup — the same trade, two very different numbers. Pricing off the wrong one is how businesses quietly undercharge.
Questions
- What is the difference between margin and markup?
- Both describe the same profit, measured against different bases. Margin divides profit by the selling price; markup divides it by the cost. A 40% margin is a 66.7% markup — quoting one when you meant the other is a common and expensive mistake.
- What margin should I aim for?
- It depends entirely on the trade. Grocery retail runs on single-digit margins, software on 80% or more. Compare against your own sector, not a general rule.
- Is gross margin the same as profit?
- No. Gross margin only subtracts the direct cost of the goods. Rent, wages, marketing and tax come out afterwards, so a healthy gross margin can still leave no net profit.