Work out gross margin from a cost and a selling price, or go the other way: enter your cost and a target margin to get the price you need to charge. Shows the equivalent markup so you do not confuse the two.
| Input | Result |
|---|---|
| $150 price, $100 cost | 33.33% margin, $50.00 gross profit |
| $49.99 price, $18.50 cost | 62.99% margin, $31.49 gross profit |
| $60 cost, 40% target margin | $100.00 selling price |
| $200 price, 35% target margin | $130.00 maximum cost |
| Quantity | Formula |
|---|---|
| Gross profit | Selling price − cost |
| Gross margin | (Price − cost) ÷ price × 100 |
| Markup | (Price − cost) ÷ cost × 100 |
| Price from a target margin | Cost ÷ (1 − target margin) |
| Cost from a price and target margin | Price × (1 − target margin) |
The only difference between margin and markup is the denominator. Margin divides by the selling price; markup divides by the cost. Because the price is always larger than the cost, the same sale always shows a higher markup than margin.
If you want a 30% margin but apply a 30% markup instead, you end up with a margin of only about 23.1%, and every sale earns less than you planned. This is the single most common pricing mistake, and it is why the two are shown side by side above.
The definitions and formulas above are the standard gross-margin and markup definitions and are stated identically by four independent references checked on 2026-10-15: the Massachusetts state government small-business pricing guide (Chapter 4, Calculating Costs & Setting a Price), the Wikipedia article on gross margin, and the Xero glossary pages for the US and Australia. Only formulas all four agree on are used here.
Scope. "Cost" on this page means cost of goods sold only, what you paid for the item. It excludes rent, wages, advertising and other overheads, so the result is a gross margin, not a net margin. Margin cannot reach 100% (that would require a cost of zero); markup has no upper limit. This is an arithmetic tool, not accounting or tax advice.
Both describe the same profit, but divide by different numbers. Margin divides the profit by the selling price; markup divides it by the cost. Since the price is larger than the cost, markup always comes out higher for the same sale. A $100 cost sold for $150 is a 50.00% markup but a 33.33% margin.
Divide your cost by (1 − 0.40), which is 0.60. A $60 cost therefore needs a $100.00 selling price. The same answer comes out of this calculator by choosing "selling price for a target margin".
A 50% markup on a $100 cost gives a $150 price. The $50 profit is half the cost but only a third of the $150 price, so the margin is 33.33%, not 50%. Aiming for a margin and applying the same number as a markup leaves you underpriced on every sale.
No. Because the selling price is always at least as large as the cost, dividing the same profit by the larger number can only give a smaller percentage. If a calculation shows margin above markup, one of the two has been worked out against the wrong base.
Enter the cost of goods sold: what you paid to buy or produce the item, including freight-in and packaging if you want a truer figure. Leave out rent, salaries, advertising and other overheads, which is why the result here is a gross margin rather than a net margin.
A 100% margin means the entire selling price is profit, which requires a cost of zero. Any real cost gives a margin below 100%. Markup has no such ceiling: a 100% markup is simply a price twice the cost.