Margin and markup both describe profit on a sale, but they are measured against different numbers, and mixing them up is one of the most common pricing mistakes. Use this calculator to set a price from a target margin or markup, or to check what an existing price actually earns.
Profit Margin & Markup Calculator
Set prices from a target margin, or check what a price really earns.
Price to charge
—
| Gross margin | Equal markup | Price for $100 cost |
|---|---|---|
| 10% | 11.1% | $111.11 |
| 20% | 25.0% | $125.00 |
| 25% | 33.3% | $133.33 |
| 30% | 42.9% | $142.86 |
| 33.3% | 50.0% | $150.00 |
| 40% | 66.7% | $166.67 |
| 50% | 100.0% | $200.00 |
| 60% | 150.0% | $250.00 |
| 70% | 233.3% | $333.33 |
Estimates only. Results update as you type. Nothing you enter leaves your browser.
Margin vs. markup: what's the difference?
Markup is profit as a percentage of cost. Gross margin is profit as a percentage of the selling price. For the same sale, markup is always the higher number. An item that costs $40 and sells for $60 has a 50% markup but only a 33.3% margin.
Gross margin = Gross profit ÷ Price
Markup = Gross profit ÷ Cost
Price from margin = Cost ÷ (1 − Margin)
Price from markup = Cost × (1 + Markup)
This is where owners get caught. Say you want a 40% margin and add 40% to cost. You end up with a 28.6% margin. On $100,000 of sales, that is about $11,400 less gross profit than you planned.
Worked example
A product costs $40.00 to buy and ship, and you want a 40% gross margin. Price = $40.00 ÷ (1 − 0.40) = $66.67. That is $26.67 of gross profit per unit and a 66.7% markup. Sell 200 a month and the product brings in about $5,333 of monthly gross profit.
What should my cost include?
Include everything it takes to deliver one unit: the product or materials, inbound freight, packaging, payment processing fees, and direct labor for a service. Leave out overhead such as rent and admin salaries. Your gross margin exists to pay for those. To check whether it pays for enough of them, use the break-even calculator.
Frequently asked questions
What is a good profit margin for a small business?
Gross margins vary widely. Grocery and fuel run thin, while software and professional services often exceed 60%. Many retail and product businesses target roughly 40–60% gross margin. Compare against businesses like yours and against your own overhead.
How do I convert markup to margin?
Margin = Markup ÷ (1 + Markup). A 50% markup equals 0.5 ÷ 1.5 = 33.3% margin. To go the other way, Markup = Margin ÷ (1 − Margin).
Is keystone pricing a 50% margin?
Yes. Keystone pricing doubles the cost, which is a 100% markup and a 50% gross margin.
Is gross margin the same as net profit margin?
No. Gross margin only subtracts the direct cost of what you sold. Net profit margin also subtracts overhead, interest, and taxes, so it is always lower.
More free small business calculators
See all thirteen on the small business calculators page.
These calculators give planning estimates, not tax, legal, or financial advice. Check important decisions with your accountant or lender.
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