Margin Calculator

Margin vs. Markup: They Are Not the Same Number

Margin and markup both measure profit, but against different bases. Margin is profit divided by the selling price (revenue), while markup is profit divided by the cost. A product that costs $50 and sells for $80 has a $30 profit — that's a 37.5% margin (30 / 80) but a 60% markup (30 / 50). Mixing the two up is one of the most common pricing mistakes small businesses make, since a "50% markup" and a "50% margin" require very different selling prices.

How This Calculator Works

Enter your cost per unit and your revenue (selling price) per unit. The calculator subtracts cost from revenue to find your profit, then expresses that profit as a percentage of revenue (gross margin) and as a percentage of cost (markup). If you're solving for a price instead of checking one you already have, use a target margin: divide cost by (1 − target margin) to find the selling price needed to hit that margin.

Related: Planning Beyond a Single Sale

Gross margin per unit is a starting point, not the full picture — it doesn't account for overhead, taxes, or financing costs on the business as a whole. To see how per-unit profitability rolls up into overall returns on capital you've put into the business, try the ROI calculator, or model a full year of revenue and expenses with the budget calculator.