Profit Margin & Markup Calculator

The Formula

Profit margin measures profit as a percentage of revenue. Markup measures profit as a percentage of cost. These are related but different metrics that are frequently confused in business.

Variable Definitions

How to Use This Calculator

1. 1

   Select what you want to calculate from the dropdown: margin %, markup %, selling price from margin, or selling price from markup.

2. 2

   Enter your cost/COGS (cost of goods sold).

3. 3

   Enter the selling price (for margin/markup) or target percentage (for price calculation).

4. 4

   View the profit, margin %, and markup % all at once.

5. 5

   Use the results to set your pricing strategy — target margins vary widely by industry and business model.

Common Applications

• Setting retail prices by calculating the required selling price to achieve a target gross margin percentage
• Analyzing product profitability by computing gross margin from cost and revenue for inventory management decisions
• Understanding the difference between margin and markup to avoid costly miscommunication in wholesale and retail pricing negotiations

Profit margin shows how much of your revenue you keep after all costs: Revenue − COGS − Expenses = Net Profit

Understanding the Concept

Margin and markup are frequently confused. A 50% markup does NOT equal a 50% margin. If cost is $100 and markup is 50%, the price is $150 — but the margin is only 33% (50 ÷ 150). This distinction is critical when negotiating wholesale pricing, setting retail prices, or comparing profitability across industries. Retailers typically target 50-60% gross margins; manufacturers are often lower at 30-40%. SaaS software margins can exceed 70-80%. Real-world example: a furniture store buys a table for $200 and wants a 50% markup, so they price it at $300. The gross margin is 33%. If a buyer asks for "50% margin" pricing on a wholesale deal, the store would need to price at $400 (markup of 100%). Confusing these two terms in a wholesale negotiation could cost thousands in lost profit per order. Another common scenario: a restaurant with food cost of $8 per plate marks up 300% to a menu price of $32. That 300% markup equals a 75% gross margin (24 ÷ 32). Understanding both numbers helps the owner decide whether to raise prices or negotiate with suppliers.

Frequently Asked Questions

Sources & References