Gross Margin Calculator
Cost and price in, gross margin and markup out. Both, every time, because they are different numbers and mixing them up sets prices too low.
Cost $40.00
Price $70.00
Profit per unit $30.00
Gross margin 42.9%
Markup 75%
Units 250
Revenue $17,500.00
Total profit $7,500.00
42.9% of the price is profit, and the price is 75% above the cost. Those
two are the same money described from opposite ends.
Output is valid and updates as you type.
Fix the highlighted fields to update the output.
Margin and markup are the same money divided by two different numbers, and mixing them up is the most expensive arithmetic mistake in small business pricing. Margin divides the profit by the price. Markup divides it by the cost. A 50 percent markup is a 33 percent margin, so a shop that means “margin” and types “markup” sells at a third less profit than it planned.
This reports both, from the same two figures, every time.
How to use
- Put in what the item costs you and what you sell it for.
- Read the two percentages. They will not match, and the gap is the point.
- Set Units to a batch size to see the revenue and total profit.
Example
A product that costs 40 and sells for 70:
Cost $40.00
Price $70.00
Profit per unit $30.00
Gross margin 42.9%
Markup 75%Thirty dollars of profit is 42.9 percent of the seventy you charged, and 75 percent of the forty it cost you. Both are true. Which one you mean depends on who you are talking to: a retailer talks in margin, a maker talks in markup, and a spreadsheet does whichever it was told.
The rule of thumb worth memorising is the 50 to 33 pair. Doubling your cost is a 100 percent markup and a 50 percent margin. Adding half is a 50 percent markup and a 33 percent margin.
Pitfalls
A 100 percent margin is impossible. Margin is a share of the price, so it caps at 100 percent, which would mean the item cost you nothing. Markup has no ceiling. If a tool reports a margin above 100, it is reporting markup.
Cost means landed cost. Materials, manufacturing, shipping into your warehouse, import duty, and the payment processing fee on the sale. Leaving the fee out is how a 3 percent margin becomes a loss.
This is gross margin, not profit. It does not know about your rent, your salaries or your tax. A healthy gross margin and no money at the end of the year is an ordinary outcome; the profit margin calculator on this site shows where it goes.
Discounts hit margin harder than they look. Ten percent off a price with a 40 percent margin takes a quarter of the profit, not a tenth of it.
Tax is not part of the price here. Use the price before VAT or sales tax. Tax is collected on behalf of the tax office and is never yours.
Compatibility
Arithmetic, done in the browser: nothing is uploaded and nothing is stored. The currency only changes how the numbers are printed, and yen is rounded to whole units because that is how it is spent.
The share link at the bottom of the page carries the figures, so a price you worked out can be sent to someone else exactly as you saw it.