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Calculate profit margin and markup from revenue and cost — and see how the two differ.
Calculate profit margin and markup from revenue and cost — and see how the two differ.
Enter values above and click Calculate — results will appear here with the formula explained.
Margin and markup describe the same profit from two different bases. Margin measures profit as a share of the selling price; markup measures it as a share of your cost. A product bought for $90 and sold for $150 carries a 40% margin but a 66.7% markup. Gross margin (this calculator: revenue minus direct cost ÷ revenue) differs from operating margin (minus operating expenses) and net margin (minus everything including interest and taxes) — track all three as the business layers grow.
Confusing the two is a classic pricing mistake. If a business wants a '50% margin' but computes price as cost plus 50%, it actually sets a 33% margin — leaving real money on the table across every sale. The conversion is markup = margin ÷ (1 − margin) and margin = markup ÷ (1 + markup); memorizing one prevents misquoting the other in negotiations forever.
Pricing power lives in margin discipline, not just volume. Raising a 20%-margin product's price 10% (with costs fixed) lifts margin to ~27% and gross profit ~50% — while needing to drop ~33% of volume to lose overall. Most businesses underestimate this leverage and over-discount; a small price test here often finds profit that no amount of volume chasing replaces.
Cost accuracy makes or breaks the number: include product, shipping-in, payment fees (2–3%), marketplace commissions (5–15%+), packaging, returns and allocated labor — not just the supplier invoice. A '40% margin' that ignores the 6% platform fee plus 15% affiliate cut is actually ~27% — the gap between spreadsheet illusion and bank reality where businesses quietly bleed.
Margin targets guide discount and wholesale negotiations. A 40% gross margin tolerates a 20% wholesale discount only by cutting margin to 25%; at 25% gross, the same discount pushes margin near single digits before overhead. Run every proposed discount through this calculator first — volume at poor margin destroys faster than no sale at all.
Benchmark within your industry, never against a universal 'good' number: grocery ~1–3% net, restaurants ~5–15% gross, SaaS 70–85% gross, construction 10–20% gross vary widely. Compare against your own trend and direct peers, then improve margin via cost reduction, value-added pricing or mix shift before chasing revenue for its own sake.
Calculate profit margin and markup from revenue and cost — and see how the two differ. Formula: margin % = (revenue − cost) ÷ revenue × 100. Example: Selling at $150 something that costs $90 yields $60 profit.
Margin and markup describe the same profit from two different bases. Margin measures profit as a share of the selling price; markup measures it as a share of your cost. A product bought for $90 and sold for $150 carries a 40% margin but a 66.7% markup. Gross margin (this calculator: revenue minus direct cost ÷ revenue) differs from operating margin (minus operating expenses) and net margin (minus everything including interest and taxes) — track all three as the business layers grow.
Confusing the two is a classic pricing mistake. If a business wants a '50% margin' but computes price as cost plus 50%, it actually sets a 33% margin — leaving real money on the table across every sale. The conversion is markup = margin ÷ (1 − margin) and margin = markup ÷ (1 + markup); memorizing one prevents misquoting the other in negotiations forever.
Pricing power lives in margin discipline, not just volume. Raising a 20%-margin product's price 10% (with costs fixed) lifts margin to ~27% and gross profit ~50% — while needing to drop ~33% of volume to lose overall. Most businesses underestimate this leverage and over-discount; a small price test here often finds profit that no amount of volume chasing replaces.
Cost accuracy makes or breaks the number: include product, shipping-in, payment fees (2–3%), marketplace commissions (5–15%+), packaging, returns and allocated labor — not just the supplier invoice. A '40% margin' that ignores the 6% platform fee plus 15% affiliate cut is actually ~27% — the gap between spreadsheet illusion and bank reality where businesses quietly bleed.
Margin targets guide discount and wholesale negotiations. A 40% gross margin tolerates a 20% wholesale discount only by cutting margin to 25%; at 25% gross, the same discount pushes margin near single digits before overhead. Run every proposed discount through this calculator first — volume at poor margin destroys faster than no sale at all.
Benchmark within your industry, never against a universal 'good' number: grocery ~1–3% net, restaurants ~5–15% gross, SaaS 70–85% gross, construction 10–20% gross vary widely. Compare against your own trend and direct peers, then improve margin via cost reduction, value-added pricing or mix shift before chasing revenue for its own sake.
Selling at $150 something that costs $90 yields $60 profit. That's 60/150 = 40% margin, and 60/90 ≈ 66.7% markup — same dollars, different stories. A discount case: 20% off that $150 (to $120) drops profit to $30, margin to 25% and markup to 33% — halving profit while revenue falls only 20%, showing why discount math deserves its own run.
Formulas are standard public references (see our methodology). External standards are cited in the text where they apply.
Last reviewed: September 2026 · Report an error