Gross margin and markup calculator
Gross margin is profit as a share of the selling price; markup is profit as a share of the cost. Enter a cost and a price to see both, or a target margin to see the price you need.
Margin and markup formulas
Gross margin % = (price − cost) ÷ price × 100 Markup % = (price − cost) ÷ cost × 100 Price for a margin = cost ÷ (1 − margin %)
Margin and markup describe the same profit from two sides. A 50% markup is only a 33% margin; a 50% margin needs a 100% markup. Mixing them up is one of the commonest pricing mistakes.
Use prices before sales tax: the tax is collected for the government and is not part of your margin.
If you add freight, duties and other landed costs to the item’s cost, the margin shown is the true margin on the goods.
Worked example
An item costs 60 and sells for 100. Gross profit is 40, so the gross margin is 40 ÷ 100 = 40% and the markup is 40 ÷ 60 ≈ 66.7%.
To reach a 45% margin instead, the price must be 60 ÷ (1 − 0.45) ≈ 109.09.
How to use the result
Price from the margin you need
Start from the margin that covers your overheads and profit target, then work out the price — not the other way round.
Check discounts
A 10% discount on a 40% margin item removes a quarter of its gross profit. Work out the margin after the discount before agreeing it.
Compare items fairly
Margins are comparable across items and channels; markups on cheap and expensive items are not.
Questions and answers
Gross profit — selling price minus cost of the goods — as a percentage of the selling price.
Margin divides profit by the selling price; markup divides it by the cost. The same sale has a lower margin percentage than markup percentage.
Margin = markup ÷ (1 + markup). A 50% markup is 0.5 ÷ 1.5 ≈ 33.3% margin.
Divide the cost by one minus the target margin. For a cost of 60 and a 45% margin: 60 ÷ 0.55 ≈ 109.09.
Yes, if you want the true margin. Freight, duties and handling to get goods ready to sell are part of their cost.
Let the app work it out for every item
Cash Flow Inventory keeps cost, margin and supplier prices behind rights per field, adds landed costs to purchases, and posts cost of goods sold with every sale. The free plan has no time limit and needs no card.