Profit Margin Calculator
Compare gross profit, margin, markup and target-margin selling price.
Compare margin, markup and target price
See the difference between gross margin and markup using the same cost and selling price.
Gross profit—
Gross margin—
Markup—
Price for target margin—
Margin and markup use different denominators
Gross margin is gross profit divided by selling price. Markup is gross profit divided by cost. Because the denominator changes, the percentages are not interchangeable.
Formulas
- Gross profit = selling price − unit cost.
- Gross margin % = gross profit ÷ selling price × 100.
- Markup % = gross profit ÷ unit cost × 100.
- Price for target margin = cost ÷ (1 − target margin rate).
Example: 40% margin is not 40% markup
If cost is $60 and price is $100, gross profit is $40. Margin is 40 ÷ 100 = 40%, while markup is 40 ÷ 60 ≈ 66.67%.
Gross profit is not net profit
This calculator considers only the entered unit cost and selling price. Operating expenses, taxes, payment fees, shipping, returns and other costs can reduce net profit.
Frequently asked questions
What is the difference between margin and markup?
Margin divides gross profit by selling price, while markup divides gross profit by cost.
How do I find price from target margin?
Divide cost by one minus the target margin rate, as long as the target margin is below 100%.
Is gross margin the same as net profit margin?
No. Gross margin typically reflects direct cost of goods or service delivery, while net profit includes broader expenses.
Can markup exceed 100%?
Yes. If gross profit is greater than the cost base, markup can exceed 100%.