Margin and markup calculator
Enter a unit selling price and its direct unit cost. See gross profit, gross margin and markup without confusing their different denominators.
Formulas used
Gross margin = gross profit ÷ price × 100
Markup = gross profit ÷ direct cost × 100
Margin from markup = markup ÷ (1 + markup) · Markup from margin = margin ÷ (1 − margin)
A worked comparison (illustrative)
A unit costing $60 and selling for $100 earns $40 gross profit. Margin is $40 ÷ $100 = 40%; markup is $40 ÷ $60 = 66.67%. Adding a 40% markup to $60 produces $84, not $100, and $84 is only a 28.57% margin ($24 ÷ $84). For a chosen 40% margin, $60 ÷ (1 − 0.40) gives $100; the price from target margin calculator does that step for you. The target itself is an assumption, not a pricing recommendation.
Margin to markup lookup
| Gross margin | Equivalent markup | Price for a $60 cost |
|---|---|---|
| 10% | 11.11% | $66.67 |
| 20% | 25% | $75.00 |
| 25% | 33.33% | $80.00 |
| 30% | 42.86% | $85.71 |
| 33.33% | 50% | $90.00 |
| 40% | 66.67% | $100.00 |
| 50% | 100% | $120.00 |
| 60% | 150% | $150.00 |
| 75% | 300% | $240.00 |
Margin can never reach 100% while cost is above zero, but markup has no upper limit. That asymmetry is why the two percentages drift further apart as they grow.
Before you enter your numbers
- Use a consistent direct-cost definition for each unit (invoice cost, or landed cost including freight and duties).
- Enter price and cost in the same currency and on the same tax basis.
- Keep gross profit separate from overhead, tax, financing and cash flow.
What the result does not tell you
Gross profit is not net profit or available cash. Rent, salaries, marketing, taxes, returns and financing all come out later; the gross vs net margin guide shows how far a 40% gross margin can shrink. This tool does not set a suitable selling price or provide accounting, tax or investment advice.
Can margin or markup be negative?
Yes. When price is below direct cost, gross profit and both percentages are negative. At a zero selling price, margin is undefined; at zero cost, markup is undefined.
Can I compare a service and a physical product?
Only if the cost definitions match. Direct labor, materials, delivery and payment fees may be treated differently. Record the scope before comparing percentages.
Sources for definitions
Definitions follow standard accounting usage as presented in the sources above. All dollar figures on this page are our own illustrative arithmetic.
Educational arithmetic only. Results do not set a suitable price or establish suitability for any lending, investment or business decision. See Use & limitations.