Profit Margin and Markup Calculator

Enter Calculation

Cost ($)

Selling Price ($)

Results

Profit Margin

40%

of selling price is profit

Markup	66.67%
Profit (Gross)	$40
Cost	$60
Selling Price	$100

What This Calculator Does

This tool turns a product cost and selling price into three key business metrics: gross profit, profit margin, and markup. Margin and markup are often confused, but they answer different questions. Margin tells you what slice of each sale you keep; markup tells you how much you added on top of your cost. Knowing both helps you price correctly and protect your bottom line.

How to Use It

Enter the cost you paid for an item and the price you sell it for. The calculator instantly returns the profit margin (as a percentage of price), the markup (as a percentage of cost), and the absolute gross profit in dollars. It works in any currency since the math is purely proportional.

The Formula Explained

Gross profit is simply Price − Cost. To express it relative to the selling price you get margin: (Price − Cost) ÷ Price × 100. To express it relative to cost you get markup: (Price − Cost) ÷ Cost × 100. Because the denominators differ, markup is always a larger percentage than margin for the same item.

$$\begin{gathered} \text{Profit} = \text{Price} - \text{Cost} \\[1.5em] \text{Margin} = \frac{\text{Profit}}{\text{Price}} \times 100\% \qquad \text{Markup} = \frac{\text{Profit}}{\text{Cost}} \times 100\% \end{gathered}$$

Margin compares profit to selling price; markup compares the same profit to cost.

Worked Example

Suppose an item costs $60 and sells for $100. Gross profit is \(\$100 - \$60 = \$40\). Margin is

$$\$40 \div \$100 \times 100 = 40\%$$

Markup is

$$\$40 \div \$60 \times 100 = 66.67\%$$

So you earn 40% of every dollar of revenue, having marked the product up by 66.67% over your cost.

FAQ

Is margin or markup better to track? Margin is best for understanding profitability and comparing across products, since it relates to revenue. Markup is useful when setting prices from a known cost.

Can margin be negative? Yes — if your selling price is below cost, both margin and profit are negative, meaning you are selling at a loss.

Why is markup higher than margin? Markup divides profit by the smaller number (cost), while margin divides by the larger number (price), so markup percentages always look bigger.