What's the difference between margin and markup?

Margin is profit as a percentage of revenue (profit / revenue). Markup is profit as a percentage of cost (profit / cost). For example, if cost is $60 and price is $100, margin is 40% but markup is 66.67%. Both are useful: margin for analyzing profitability, markup for setting prices.

What is a good profit margin?

It varies by industry. Retail: 2-5% (net), 20-50% (gross). Software/SaaS: 15-25% (net), 70-90% (gross). Consulting: 15-30% (net). Restaurants: 3-5% (net). Research your industry benchmarks. Higher isn't always better — consider competitive positioning and growth strategy.

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

Use the formula: Price = Cost / (1 - Target Margin). For example, cost $60, target margin 40%: Price = $60 / (1 - 0.40) = $100. This ensures you achieve exactly 40% margin on the sale.

What's included in gross margin vs net margin?

Gross margin = (Revenue - COGS) / Revenue, where COGS is direct costs (materials, labor). Net margin = (Revenue - All Expenses) / Revenue, including operating expenses, taxes, interest. Gross margin shows product profitability; net margin shows overall business profitability.

Why is my margin negative?

A negative margin means you're selling at a loss — cost exceeds revenue. This may be intentional for market penetration, clearing inventory, or as a loss leader strategy. However, sustained negative margins are unsustainable. Review your pricing and cost structure.

Is my business data sent to a server?

No. All calculations happen entirely in your browser using JavaScript. Your revenue, costs, and profit data are never transmitted over the network. The tool works offline after the page loads.

Tools

Gross Margin

Revenue

Cost

Profit

$40.00

Gross Margin

40.00%

Markup

66.67%

Net Margin

Revenue

Total Cost

Profit

$2,500.00

Net Margin

25.00%

Profit Margin Calculator — Calculate Gross & Net Profit Margin

Free profit margin calculator for gross margin and net margin calculations. Calculate profit percentage, markup, and break-even analysis. Essential for business planning and pricing strategy. All calculations run locally in your browser.

Features

✓Calculate gross profit margin (revenue - cost of goods sold)
✓Calculate net profit margin (revenue - all expenses)
✓Calculate markup percentage (profit / cost)
✓Understand the difference between margin and markup
✓Instant calculation as you type
✓Perfect for pricing strategy and business planning
✓Works for any currency or unit
✓Helps set competitive yet profitable prices
✓Essential for e-commerce and retail businesses
✓All calculations run locally in your browser

How to Use

1For gross margin: Enter revenue (selling price) and cost (cost of goods).
2View instant results: profit amount, margin %, and markup %.
3For net margin: Enter revenue and total costs (including operating expenses).
4Compare different pricing scenarios to find optimal margins.
5Use markup to set prices from cost (price = cost × (1 + markup%)).

Frequently Asked Questions

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