Profit Margin and Markup Calculator: Enter item cost and selling price to calculate gross profit, profit margin and markup. Margin uses selling price as its denominator, while markup uses cost, so the two percentages are not interchangeable.
Profit Margin and Markup Calculator
Compare profit as a share of price and as a share of cost.
Formula and assumptions
Profit · Profit = Selling price − Total cost. Margin = ratio((Selling price − Total cost) × 100,Selling price). Markup = ratio((Selling price − Total cost) × 100,Total cost).
Margin uses selling price as its denominator. Markup uses cost. Undefined percentages are omitted.
This tool processes inputs in your browser. Calculator values are not stored or sent by this plugin.
Further reading: Digital Marketing Services: Elevating Your Brand and Driving Sales in the Online Era
Related tools: Discount Calculator
Page editor: Usman Arshad · Last edited: November 3, 2026
What this calculator tells you
Gross profit is selling price minus the included cost. Profit margin expresses that profit as a percentage of selling price; markup expresses the same profit as a percentage of cost. The calculation is only as complete as the costs entered.
- Check the margin and markup of a product, service or project.
- Explain why a target markup does not equal the same target margin.
- Test selling-price scenarios before adding tax or discounts.
For a decision-ready record, save the input definitions, reporting period, currency, source system and calculation date with the result. This makes the Profit Margin and Markup Calculator output reproducible and prevents a later reader from comparing figures that were produced from different scopes or assumptions.
How to use the Profit Margin and Markup Calculator
- Choose the cost basis, such as product cost or direct project cost.
- Enter cost and selling price in the same currency and tax treatment.
- Calculate gross profit, margin and markup.
- Add overhead, fees, discounts and tax separately before making a final pricing decision.
Formula and variables
Profit = selling price − cost; margin % = profit ÷ selling price × 100; markup % = profit ÷ cost × 100Margin divides by selling price, while markup divides by cost. If cost or selling price is zero, one or more percentages cannot be calculated meaningfully.
- Cost
- The cost basis intentionally included in the calculation.
- Selling price
- Price charged before or after tax, used consistently with cost.
- Gross profit
- Selling price less the included cost.
Worked examples
Product sale
Cost is $60 and selling price is $100. Profit is $40, margin is 40%, and markup is 66.67%. The two percentages describe the same profit from different bases.
Service project
Direct delivery cost is £800 and price is £1,200. Gross profit is £400, margin is 33.33%, and markup is 50%, before overhead and tax.
Discount effect
An item costing $70 is reduced from $120 to $100. Gross profit falls to $30 and margin becomes 30%. Recalculate after discounts rather than using the original list price.
How to interpret the result
Margin is commonly used to understand how much of sales revenue remains after the included cost. Markup is often used when building a price from cost. A business may use either, but reports and pricing rules must label the chosen measure.
This calculator normally represents gross or contribution economics, not net business profit. Rent, salaries, payment fees, returns, advertising and tax can materially change what remains.
Practical tips
- Define exactly which costs are included.
- Use consistent tax-inclusive or tax-exclusive values.
- Recalculate after discounts, platform fees and refunds.
- Convert a target margin to price rather than adding the same percentage as markup.
Common mistakes to avoid
- Using margin and markup as synonyms.
- Leaving major direct costs out of the cost basis.
- Calculating from list price when the actual selling price is lower.
Assumptions and limitations
- The result is not net profit unless all relevant costs are included.
- Tax treatment varies by location and business structure.
- Returns, waste and payment fees can reduce realized margin.
- Averages may hide differences between products or clients.
Treat the result as a planning estimate. Confirm important business, tax, platform or contractual decisions against your own records and the latest applicable terms.
Related tools
Frequently asked questions
What is the difference between margin and markup?
Margin divides profit by selling price. Markup divides profit by cost. They produce different percentages from the same transaction.
Can margin be higher than 100%?
A conventional positive-cost sales margin does not exceed 100%. Unusual negative costs or inconsistent inputs can produce misleading results.
How do I price for a target margin?
Price equals cost divided by one minus the target margin expressed as a decimal. A 40% target margin on $60 cost gives a $100 price.
Does the calculator include tax and fees?
Only if you include them consistently in the entered values. It does not add tax or platform fees automatically.
Is gross margin the same as net margin?
No. Gross margin uses selected direct costs. Net margin considers the broader expenses of running the business.
Sources and review
Primary reference: U.S. Small Business Administration finance guidance. Use complete business records and professional accounting advice for financial decisions; this calculator explains the arithmetic only.
Reviewed by: Usman Arshad, Artsians page editor. Last reviewed: November 5, 2026. The calculator runs in your browser and does not perform currency conversion.