Profit Margin & Markup Calculator
Enter your cost and selling price to calculate gross profit, profit margin, and markup percentage for a product, service, or business quote.
Enter Your Figures
Total cost to produce or acquire the item
The price charged to the customer (must be > 0)
Your Pricing Results
Enter cost and selling price to calculate gross profit, profit margin, and markup.
How to Use This Calculator
Enter the cost — what you pay to produce, purchase, or deliver the product or service — and the selling price — what you charge the customer. The calculator instantly returns three values: gross profit in dollar terms, profit margin as a percentage of the selling price, and markup as a percentage of the cost.
The tool handles edge cases correctly: if cost is zero, markup is labeled as undefined (division by zero). If the selling price is below cost, a loss scenario is clearly indicated with text and an icon — not color alone.
Formulas: Gross Profit, Margin, and Markup
The calculator uses the following standard accounting formulas:
Gross Profit
Selling Price − Cost
The absolute dollar amount of profit before operating expenses.
Profit Margin
Gross Profit ÷ Selling Price × 100
Profit as a percentage of revenue (selling price). How much of each dollar of revenue you keep.
Markup
Gross Profit ÷ Cost × 100
How much above cost you charged. Normalized to the cost, not the selling price.
Margin vs. Markup: Not the Same Number
Margin and markup both start from the same gross profit figure, but they measure it against different denominators. Margin divides profit by the selling price — it tells you what percentage of revenue is profit. Markup divides profit by the cost — it tells you by how much you increased the cost price.
Because the selling price is always higher than the cost (assuming a profit), the denominator for margin is always larger than the denominator for markup. This means margin is always a smaller percentage than markup for the same product. Confusing the two when pricing products is a common mistake that can result in underpricing.
Example: A 25% markup is not a 25% margin
A product costing $80 sold at $100 has a 25% markup (20 ÷ 80 × 100) but only a 20% margin (20 ÷ 100 × 100). If you need a 25% margin, you need to price higher than $107.
Illustrative Example
The following numbers are illustrative only. A product costs $60 to produce and sells for $100:
Gross Profit
$40
= 100 − 60
Profit Margin
40%
= 40 ÷ 100 × 100
Markup
66.67%
= 40 ÷ 60 × 100
The 40% margin and 66.67% markup both arise from the same $40 gross profit — they simply measure it from different reference points. Enter your own cost and selling price in the calculator above to compute your actual figures.
Common Use Cases
This profit margin and markup calculator is useful across a range of scenarios:
- Product pricing — check whether a planned selling price hits your margin target before launching
- Service quotes — confirm that a quoted rate covers your direct cost and returns the margin you need
- Ecommerce and retail — quickly evaluate per-unit profitability across different SKUs
- Freelance work — verify that your rate accounts for your time cost and desired margin
- Bulk or wholesale pricing — understand how tiered pricing changes your effective margin
Important Limitations
This is a gross margin tool— it calculates the margin between the cost input and the selling price input. It does not automatically account for overhead costs, payroll, shipping, payment processing fees, returns, storage, or any other operating expense unless you have already included those costs in your "cost" input.
Gross profit margin is not the same as net profit margin. Net profit margin accounts for all operating expenses, interest, and taxes, which this calculator does not model. A healthy gross margin does not guarantee overall business profitability if operating costs are high.