Margin & Markup Calculator

What this calculator does

This tool turns your unit cost and selling price into the three numbers that actually drive pricing decisions: your gross profit per unit, your gross margin percentage, and your markup percentage. It also works backward — telling you the price you would need to charge to hit a target margin. It is built for owners who set prices and want to know, in plain terms, how much of each sale they actually keep.

Margin vs. markup — the difference that trips people up

These two percentages describe the same dollar of profit but measure it against different bases, so they are never equal:

• ·Gross margin = profit ÷ selling price. It answers "of every dollar a customer pays me, how much do I keep?"
• ·Markup = profit ÷ cost. It answers "how much did I add on top of what the item cost me?"

Because cost is always smaller than price, the markup percentage is always larger than the margin percentage for the same sale. Confusing the two is one of the most common — and most expensive — pricing mistakes a growing business makes.

A worked example

Say a product costs you $60 and you sell it for $100.

Same $40 of profit — but a 40% margin and a 66.7% markup. If you had simply "added 40%" to your $60 cost, you would have priced at $84 and earned only a 28.6% margin, not the 40% you may have intended.

How to read your result

There is no single "good" margin — it depends heavily on your industry. As rough orientation, software and professional services often run high gross margins (commonly 60–90%), while retail, e-commerce, and distribution typically operate on thinner margins (often 20–40%), and food or hardware can be lower still. The more useful question is whether your margin is holding steady or quietly eroding over time, and whether it covers your fixed costs with enough left over to grow. Track it the same way every month and watch the trend.

Common mistakes

• ·Pricing off markup but reporting in margin. "I add 30%" feels like a 30% margin but is really about 23%.
• ·Leaving out true cost. Margin is only honest if your cost includes freight, payment-processing fees, returns, and shrinkage — not just the wholesale price.
• ·Blending margins across products. A healthy average can hide individual products that lose money on every sale.

Frequently asked questions