A profit margin calculator computes the gross profit, gross margin percentage and markup from a revenue (selling price) and cost figure. Gross margin is the profit expressed as a percentage of revenue. Markup is the profit expressed as a percentage of cost. These are two different ways of expressing the same profit figure and are often confused.

1. Enter the revenue (selling price or total sales).
2. Enter the cost (cost of goods sold or total cost).
3. Click Calculate.

Revenue: $500, Cost: $350
Profit: $150 | Gross Margin: 30% | Markup: 42.86%

Gross margin and markup are related but different. A 30% gross margin means 30 cents of every dollar of revenue is profit. A 42.86% markup means the selling price is 42.86% above the cost. Retailers typically think in terms of margin; manufacturers often think in terms of markup.

• Confusing margin with markup — a 50% markup is only a 33.3% margin.
• Using gross margin when net margin is needed — gross margin ignores operating expenses, taxes and interest.

What is the difference between gross margin and net margin?

Gross margin is revenue minus cost of goods sold, expressed as a percentage of revenue. Net margin subtracts all expenses (operating costs, taxes, interest) from revenue. This calculator computes gross margin only.

How do I set a price to achieve a target margin?

Price = Cost ÷ (1 − Target Margin%). For a 30% margin: Price = Cost ÷ 0.70. For example, if cost is $70: Price = $70 ÷ 0.70 = $100.