Profit Margin & Markup Calculator

About this calculator

Margin and markup are two ways to describe the same spread between what you paid for something and what you sold it for — but they divide by different numbers, so they are never the same percentage. This calculator takes your cost and selling price, shows you gross margin, markup, and net margin (when you add operating expenses), and works backwards to tell you the selling price you need to hit any target margin.

How to read your results

The headline result is gross margin %: the share of the selling price that is profit before operating costs. Markup % is that same gross profit expressed as a fraction of the cost instead of the price — it will always be a larger number than the margin. Net margin adds your operating expenses (rent, salaries, overheads) to find the profit that actually flows through. The "price for target margin" field lets you set a desired margin and instantly reads back the minimum price you must charge.

Worked example

You buy a product for $60 and sell it for $100, with $15 in operating expenses.

Gross profit is $40. Gross margin is 40% (40 ÷ 100). Markup is 66.7% (40 ÷ 60 — always larger than the margin). With $15 opex, net profit is $25 and net margin is 25%. If you set a 50% target margin, the calculator shows you need a selling price of $120.

Frequently asked questions

What is the difference between margin and markup?

Margin divides the gross profit by the selling price; markup divides the same gross profit by the cost. A 40% margin means 40 cents of every dollar of revenue is profit. A 66.7% markup on the same transaction means you charged 66.7% more than the cost. They describe the same deal from different reference points, which is why mixing them causes pricing errors.

What is a good gross margin?

It depends heavily on the industry. Software and digital products often run 70–90%, retail goods typically 20–50%, and grocery or commodity businesses may operate on 5–15%. A useful starting point is to find the average margin for your industry and then decide whether your model, volume, or value proposition justifies going above or below it.

Should I include operating expenses in my margin calculation?

Gross margin ignores overheads and tells you the ceiling available to cover them. Net margin (gross profit minus operating expenses divided by revenue) tells you what actually remains as profit. For pricing decisions, gross margin is the key lever; for judging business health, net margin is more complete. Use both together.

How do I use the target margin field?

Set the slider to the gross margin % you need — for example, 50%. The calculator immediately shows the minimum price you must charge for that cost to hit that margin. Useful when you know your required return before you set a price list.

How it's calculated

Gross profit = price − cost. Gross margin % = (gross profit ÷ price) × 100. Markup % = (gross profit ÷ cost) × 100. Net profit = gross profit − operating expenses. Net margin % = (net profit ÷ price) × 100. Price for target margin = cost ÷ (1 − target margin / 100). Sources: Corporate Finance Institute — Profit Margin (https://corporatefinanceinstitute.com/resources/accounting/profit-margin/) and Gross Margin Ratio (https://corporatefinanceinstitute.com/resources/accounting/gross-margin-ratio/).