What's the difference between margin and markup?

Both measure the same dollar profit, against different bases. Margin = profit ÷ revenue (how much of each sales dollar you keep). Markup = profit ÷ cost (how much you added on top of cost). A $60 cost sold at $100 is a 40% margin but a 66.7% markup. The two converge near zero and diverge fast: 50% margin = 100% markup.

How do I price for a target margin?

Divide cost by (1 − target margin). For a 35% margin on an $80 cost: $80 ÷ 0.65 = $123.08. Never multiply cost by (1 + margin) — that gives you a markup and silently undershoots the margin you wanted.

What's a good profit margin?

Depends entirely on the model. Grocery runs 1-3% net on huge volume; restaurants 3-10%; e-commerce gross margins of 30-50% are typical before ad spend; SaaS gross margins run 70-85%. Compare against your own category, not a universal number — and remember this tool shows gross margin, before overhead.

Why is my real margin lower than the calculator says?

Usually incomplete cost. Add inbound shipping, packaging, payment processing (~3%), marketplace fees (8-15% on Amazon/Etsy), expected returns, and discounts. Recompute with the all-in landed cost — that's the honest margin.

Can margin exceed 100%?

No — margin is capped below 100% because profit can't exceed revenue (cost would need to be negative). Markup, however, can be anything: a $5 cost sold at $50 is a 90% margin and a 900% markup. If you ever compute a margin above 100%, you've divided by cost — that's markup.

Money & Finance · Free tool

Profit Margin Calculator

Determine your gross profit margin, markup, revenue, and costs in seconds. Use this free online calculator with no account sign-up needed.

Updated June 2026

Cost ($)Revenue ($)

Profit

$30.00

Margin

37.50%

Markup

60.00%

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What it does

Calculate profit margin, markup, and gross profit from cost and revenue — or reverse it: input a cost and desired margin, and the tool computes the price you need to charge. Margin is profit as a percent of revenue; markup is profit as a percent of cost. Mixing them up is the number-one pricing mistake, so the tool shows both.

Every computation runs in your browser. Useful for pricing products, evaluating deals, or stress-testing a quote. Follow up with break-even calculator to see how many units you need to sell, or ROI calculator for investment returns.

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Example input & output

Input

Mode: Cost + revenue
Cost: $60
Revenue: $100

Output

Profit: $40
Margin: 40%
Markup: 66.7%

Same $40 profit, two different percentages: margin divides by revenue ($100), markup divides by cost ($60). A '40% markup' on $60 would price the item at $84, not $100.

How to use it

Enter the unit cost.
Enter the selling price (or flip to reverse mode).
In reverse mode, enter a target margin — the tool returns the required price.
Read profit, margin %, and markup % side by side.

How it works

Forward mode: profit = revenue − cost, margin = profit ÷ revenue, markup = profit ÷ cost. Reverse mode solves for price from a target margin: price = cost ÷ (1 − margin) — division, not multiplication. To get a 40% margin on a $60 cost: $60 ÷ 0.6 = $100, not $60 × 1.4 = $84.

Common mistakes when using this tool

Multiplying by (1 + margin) to set a price. That produces a markup, not a margin. The gap widens as margins grow: at a 50% target, multiplication underprices by 25%.
Quoting margin to a supplier who means markup (or vice versa). Retail buyers usually speak margin; distributors often speak markup. Confirm which one before agreeing to numbers.
Using incomplete cost. Landed cost includes shipping, duties, payment processing, and returns — not just the factory invoice. A “40% margin” on incomplete cost can be a 25% margin in reality.

When to use this tool

Per-unit or per-deal pricing decisions where cost and price are both known or targeted.
Converting between margin and markup — the tool always shows both so you never mix them up.
Quick gross-margin sanity checks on a product line before deeper P&L work.

When not to use it

Net margin questions — this computes gross margin; rent, salaries, and overhead aren't in the math. Use the break-even calculator for fixed costs.
Service businesses billing by time — effective margin depends on utilization; price per hour alone won't tell you.
Multi-product blended margins — compute each product separately and weight by revenue.

Common use cases

Pricing a new product: cost is $12.40 landed, you want a 45% margin — reverse mode gives the price.
Checking what margin a wholesale deal actually leaves after the buyer's discount.
Translating an agency's 'we mark up media 20%' into the margin it implies (16.7%).
Quoting freelance work where you know your cost basis and target margin per project.

Frequently asked questions

What's the difference between margin and markup?: Both measure the same dollar profit, against different bases. Margin = profit ÷ revenue (how much of each sales dollar you keep). Markup = profit ÷ cost (how much you added on top of cost). A $60 cost sold at $100 is a 40% margin but a 66.7% markup. The two converge near zero and diverge fast: 50% margin = 100% markup.
How do I price for a target margin?: Divide cost by (1 − target margin). For a 35% margin on an $80 cost: $80 ÷ 0.65 = $123.08. Never multiply cost by (1 + margin) — that gives you a markup and silently undershoots the margin you wanted.
What's a good profit margin?: Depends entirely on the model. Grocery runs 1-3% net on huge volume; restaurants 3-10%; e-commerce gross margins of 30-50% are typical before ad spend; SaaS gross margins run 70-85%. Compare against your own category, not a universal number — and remember this tool shows gross margin, before overhead.
Why is my real margin lower than the calculator says?: Usually incomplete cost. Add inbound shipping, packaging, payment processing (~3%), marketplace fees (8-15% on Amazon/Etsy), expected returns, and discounts. Recompute with the all-in landed cost — that's the honest margin.
Can margin exceed 100%?: No — margin is capped below 100% because profit can't exceed revenue (cost would need to be negative). Markup, however, can be anything: a $5 cost sold at $50 is a 90% margin and a 900% markup. If you ever compute a margin above 100%, you've divided by cost — that's markup.

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