Profit margin calculator
Margin and markup are different numbers from the same two figures, and confusing them is how products get underpriced. Both are shown every time.
USD
USD
Gross margin40.00 %
- Markup
- 66.67 %
- Profit per unit
- $40.00
- Total profit
- $4,000
- Revenue
- $10,000
- Cost of goods sold
- $6,000
The formula
Margin = (price − cost) / price. Markup = (price − cost) / cost. A 50% markup is a 33.3% margin.
Worked example
Cost 60, price 100: profit 40, margin 40%, markup 66.7%. Across 100 units, 4,000 of profit on 10,000 of revenue.
How to use it
- 1Unit cost should include everything variable: goods, packaging, payment fees, shipping.
- 2Price excluding tax, or the margin will be overstated.
- 3Compare margin with margin — never a margin against a competitor's markup.
Questions people ask
Which figure should I manage by?
Margin, because it tells you what share of each sale you keep. Markup is only useful as the rule you apply to a cost when setting a price.
What margin is healthy?
It depends entirely on the sector: grocery retail runs on a few percent, software on most of the price. Compare against your own industry, not an absolute.
Last reviewed: 2026-10-20