Business & Pricing
Profit Margin
Gross margin, net margin, and markup — convert between them cleanly so you do not mix up 40% margin and 40% markup.
Profit Margin
Inputs
Results
Margin
Profit as a % of price
60.0%
Markup
Profit as a % of cost
150.0%
Cost
$10.00
Price
$25.00
Gross profit
$15.00
How to use this
Margin and markup are not the same number. Margin is profit as a percentage of the price. Markup is profit as a percentage of the cost. A 50% markup is only a 33% margin. A 50% margin is a 100% markup.
Wholesale and retail conversations often mix them up. Margin is the number you want on your P&L; markup is the lever at purchase.
Formula
margin = (price − cost) ÷ price
markup = (price − cost) ÷ cost
margin from markup: margin = markup ÷ (1 + markup)
markup from margin: markup = margin ÷ (1 − margin)
Related calculators
Break-Even Analysis
Fixed costs, variable cost per unit, and price — see the break-even unit count and revenue.
Cost-Plus Pricing
Set a retail price from your cost and target margin — with a sanity check against competitor pricing.
Wholesale Markup
Price wholesale and retail in lockstep — keystone, MAP-friendly, and key-two markups with gross profit checks.
Formula
margin = (price − cost) / price; markup = (price − cost) / cost