Margin Calculator

    Calculate profit margins, gross margins, and markup percentages for your business.

    Calculate Margin & Markup

    The total cost to produce or acquire the product

    The price at which the product is sold

    About Margin & Markup

    Margin and markup are crucial metrics in business for understanding profitability and pricing strategies. While related, they represent different perspectives on profit.

    Key Formulas

    Gross Profit = Revenue - Cost
    Gross Margin = (Gross Profit ÷ Revenue) × 100
    Markup = (Gross Profit ÷ Cost) × 100

    Margin vs. Markup

    • Margin: Profit as a percentage of selling price (revenue perspective)
    • Markup: Profit as a percentage of cost (cost perspective)
    • Margin is always less than markup for the same transaction
    • Both measure profitability but from different angles

    Industry Benchmarks

    • Retail: 20-50% gross margin typical
    • Restaurants: 60-70% gross margin on food
    • Software/SaaS: 70-90% gross margin
    • Manufacturing: 25-35% gross margin typical
    • Consulting: 50-70% gross margin

    Examples

    • Example 1: Cost $50, Price $100 → $50 profit, 50% margin, 100% markup
    • Example 2: Cost $75, Price $100 → $25 profit, 25% margin, 33% markup
    • Example 3: Cost $20, Price $100 → $80 profit, 80% margin, 400% markup

    Practical Tips

    • Use margin for business performance analysis
    • Use markup for pricing strategy decisions
    • Higher margins don't always mean better business
    • Consider volume when evaluating profitability
    • Include all costs (overhead, labor, materials) for accurate calculations

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