Profit Margin Calculator
Turn revenue and cost into gross profit, profit margin and markup — and see why margin and markup are not the same number.
How it works
Gross profit = revenue − cost · Margin % = profit ÷ revenue × 100 · Markup % = profit ÷ cost × 100
Gross profit is simply revenue minus cost. Margin expresses that profit as a share of the selling price, while markup expresses the same profit as a share of the cost. Because the price is always larger than the cost, the margin percentage is always smaller than the markup percentage — mixing them up is one of the most common pricing mistakes.
Worked example
On $10,000 revenue with $6,000 of cost, gross profit is $4,000. Margin is 4,000 ÷ 10,000 = 40%; markup is 4,000 ÷ 6,000 = 66.7% — the same dollars measured against two different bases.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price (profit ÷ price); markup is profit as a percentage of cost (profit ÷ cost). A $20 profit on an item that costs $80 and sells for $100 is a 20% margin but a 25% markup — the same dollars, two different bases.
Is this gross or net margin?
This is gross margin — revenue minus the direct cost of the goods sold. Net margin also subtracts overhead, salaries, marketing and taxes, so it is always lower than gross margin.
What is a good profit margin?
It varies widely by industry: grocery retail runs on single-digit margins while software can exceed 80%. Compare against typical margins for your specific sector rather than a universal number.
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Educational estimate, not financial advice.