Markup & Margin Calculator

Turn a cost and sale price into profit, markup and gross margin.

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Gross margin
Markup
Gross profit
Cost
Sale price

Gross figures only — they exclude overheads such as rent, wages and shipping. This is general information, not financial advice.

Two views of the same profit

Markup and margin both describe profit, but measure it against different things. Markup compares profit to what the item cost you; margin compares it to what the customer paid.

markup = profit ÷ cost · margin = profit ÷ price

Because the sale price is bigger than the cost, the margin percentage is always lower than the markup for the same profit. Mixing them up is a classic pricing error — a "50% markup" is only a 33% margin.

Worked example

A product that costs $40 and sells for $100 makes $60 profit. That is a 150% markup on cost, but a 60% gross margin on the sale price — the same profit, two different denominators.

Pricing with intent

Setting prices from cost alone is easy with markup; understanding profitability is easier with margin. Knowing both — and that gross profit still has overheads to cover — keeps pricing decisions grounded.

Worth remembering

  • Margin < markup. Always, for the same profit, because of the larger denominator.
  • Gross isn’t net. Rent, wages and shipping come out of gross profit.
  • Convert with care. A target margin implies a specific, higher markup.

Frequently asked questions

What is the difference between markup and margin?
Markup is profit as a percentage of cost; margin is profit as a percentage of the sale price. Because the sale price is larger, the margin percentage is always smaller than the markup.
Which should I use for pricing?
Markup is handy for setting a price from a known cost. Margin is the figure most businesses report and compare, since it shows how much of each sale is profit.
How do I convert between them?
Margin = markup ÷ (1 + markup), and markup = margin ÷ (1 − margin), with both as decimals. A 100% markup, for instance, is a 50% margin.
Is this net profit?
No. This is gross profit — sale price minus the cost of the item. Net profit also subtracts overheads like rent, wages and marketing.