Margin Calculator
Enter a cost and revenue to get gross margin AND markup side by side — a $70 cost sold for $100 is a 30% margin but a 42.86% markup, the same profit divided by two different bases. Switch modes to price a product to hit a target margin, work backward to the maximum you can pay a supplier, or convert a markup percentage into its equivalent margin.
30%
Gross margin
Profit, margin & markup
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Margin (profit ÷ revenue) = 30% · Markup (profit ÷ cost) = 42.86% — always two different numbers for the same profit.
Margin divides profit by revenue; markup divides the same profit by cost — they are always different percentages. How we calculate →
Margin vs. markup: the difference that trips up most pricing decisions
Margin and markup both measure the same dollar of profit, but as a percentage of two different numbers — that's the entire source of the confusion. Margin divides profit by revenue (the selling price): how much of every sales dollar you actually keep. Markup divides the same profit by cost: how much you added on top of what you paid.
Take a product that costs $70.00 and sells for $100.00. Profit is $30.00 either way. As a margin: $30.00 ÷ $100.00 = 30%. As a markup: $30.00 ÷ $70.00 = 42.86%. Same transaction, same profit, two genuinely different percentages — and markup is always the bigger number of the two (since cost is always smaller than revenue when there's any profit at all).
Mixing them up is a real pricing mistake, not just a vocabulary slip: a retailer who wants a 40% margin but accidentally prices as a 40% markup ends up keeping noticeably less profit than they intended — see the worked example below.
The mistake that actually costs money: pricing off the wrong base
Say a product costs $60.00 and you want a 40% margin. The correct formula is Revenue = Cost ÷ (1 − Margin) = $60.00 ÷ (1 − 0.40) = $100.00. A common (wrong) shortcut is Revenue = Cost × (1 + 40%) = $84.00 — that formula actually computes a 40% markup, which only nets a 28.57% margin, well short of the 40% margin that was intended.
Priced correctly at $100.00, the profit is $40.00, which is genuinely a 40% margin — and, worked out the other way, a 66.67% markup on cost. Use the "cost + margin% → revenue" mode above whenever you're setting a price to hit a specific margin target, not the cost-plus-markup shortcut.
Reverse mode: how much can you afford to pay for something?
If you know your selling price and the margin you need, you can work backward to the maximum you can pay a supplier: Cost = Revenue × (1 − Margin). Selling at $200.00 and needing a 25% margin, the most you can pay for the product is Cost = $200.00 × (1 − 0.25) = $150.00, leaving $50.00 in profit.
Thinking in markup instead? Convert it to margin.
Many retailers and wholesalers set prices as a markup on cost rather than a margin target — "cost-plus-60%" pricing, for example. A $50.00 product with a 60% markup sells for Revenue = Cost × (1 + 0.60) = $80.00. Converted to a margin, that same pricing is only 37.5% — noticeably lower than the 60% markup number, because margin divides by the bigger revenue figure while markup divides by the smaller cost figure.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit divided by revenue (selling price); markup is the same profit divided by cost. On a $70.00 product sold for $100.00, the $30.00 profit is a 30% margin but a 42.86% markup — markup is always the higher number for the same profit.
How do I calculate profit margin?
Gross margin = (Revenue − Cost) ÷ Revenue × 100. For a $70.00 cost and $100.00 revenue: ($100.00 − $70.00) ÷ $100.00 × 100 = 30%.
How do I price a product to hit a target margin?
Use Revenue = Cost ÷ (1 − target margin), not Cost × (1 + target margin) — that second formula computes a markup, not a margin, and will undershoot your target. A $60.00 cost with a 40% margin target needs a selling price of $100.00, not $84.00.
Is a 50% margin the same as a 50% markup?
No. A 50% margin on a product selling for $100 means $50 of profit on $100 of cost (a 100% markup). A 50% markup on a $100 cost means selling at $150, which is only a 33.3% margin. The two numbers are only equal (at 0%) when there's no profit at all.
How do I convert markup to margin?
Margin% = Markup% ÷ (100% + Markup%) × 100. A 60% markup converts to a margin of 60 ÷ 160 × 100 = 37.5% — matching the worked example above ($50.00 cost, 60% markup, $80.00 revenue, 37.5% margin).
How much can I pay a supplier and still hit my margin target?
Cost = Revenue × (1 − target margin). Selling at $200.00 with a 25% margin target, the most you can pay is $150.00 — use the reverse mode above to solve this for your own numbers.
Why is markup always higher than margin for the same profit?
Because markup divides profit by cost (the smaller number, when there's any profit), while margin divides the same profit by revenue (the larger number). Dividing by a smaller denominator always gives a bigger percentage, so markup% > margin% whenever profit is greater than zero.
Researched & verified by the Calcuris Data & Research Team. How we build and check our tools →