What Is Margin on Selling Price?
Gross margin (or margin on selling price) measures how much of each sales dollar is profit after covering the cost of the item. Unlike markup, which is calculated against cost, margin is calculated against the selling price. This makes margin the standard way retailers and finance teams express profitability, because it directly relates to revenue.
How to Use This Calculator
Enter the cost of the product (what you paid) and the selling price (what the customer pays). The calculator returns the gross margin as a percentage of the selling price, the gross profit in dollars, and the equivalent markup on cost so you can compare both views.
The Formula Explained
The core equation is:
$$\text{Margin \%} = \frac{\text{Selling Price} - \text{Cost}}{\text{Selling Price}} \times 100$$
The numerator is the gross profit per unit. Dividing by the selling price and multiplying by 100 converts it into a percentage of revenue. Because the denominator is the selling price (which is always larger than cost for a profitable item), the margin percentage is always lower than the markup percentage.
Worked Example
Suppose an item costs $60 and you sell it for $100. The gross profit is \(\$100 - \$60 = \$40\). The margin is $$\$40 / \$100 \times 100 = 40\%.$$ The markup on cost, for comparison, is \(\$40 / \$60 \times 100 \approx 66.67\%\). Same dollars of profit, two different percentages.
FAQ
Is margin the same as markup? No. Markup is profit divided by cost; margin is profit divided by selling price. A 50% markup equals a 33.3% margin.
Can margin exceed 100%? No. Since profit can never exceed the selling price (cost cannot be negative), margin tops out below 100%.
What if cost equals selling price? The margin is 0% — you make no profit.
