Profit Margin & Markup Calculator
Work out gross profit, margin and markup from cost and price — or the price you need to hit a target margin, plus a price table for common margins.
Business · Free · Last updated 2 October 2026
Symbol only — the arithmetic is currency-neutral.
Cost and selling price
What the item costs you, including landed freight where relevant.
Used by the pricing section below. Capped at 95%.
Profitability
- Gross profit per unit
- +$60.00
- Cost of goods
- $40.00
- Profit as % of cost (markup)
- 150.0%
Gross, not net
This is gross profit on one unit — price less cost of goods. It excludes payment fees, shipping, returns, marketing, salaries and tax, all of which gross margin has to fund.
Price for a 60% margin
Selling price across common margins
The same $40.00 cost at each margin. Note how steeply price rises as margin approaches its ceiling — chasing the last few points can price you out of the market.
| Margin | Selling price | Gross profit |
|---|---|---|
| 20% | $50.00 | $10.00 |
| 30% | $57.14 | $17.14 |
| 40% | $66.67 | $26.67 |
| 50% | $80.00 | $40.00 |
| 60% · your target | $100.00 | $60.00 |
| 70% | $133.33 | $93.33 |
| 80% | $200.00 | $160.00 |
One cost figure across every row. If the landed cost varies by batch, price from the worst realistic case rather than the best.
How the Profit Margin & Markup Calculator works, and how to get more out of it
Margin and markup are not the same number
This is the most expensive confusion in small-business pricing, and it comes down to the denominator.
Margin expresses profit as a percentage of the selling price. Markup expresses the same profit as a percentage of the cost. Both describe one sale; they divide it by different things, so markup is always the larger number and the gap widens as margins rise.
- Gross profit = selling price − unit cost
- Margin % = gross profit ÷ selling price × 100
- Markup % = gross profit ÷ unit cost × 100
- Price from a target margin = unit cost ÷ (1 − target margin)
- Price from a target markup = unit cost × (1 + target markup)
A worked example
An item costing 40 and selling at 100 carries a gross profit of 60, a margin of 60% and a markup of 150%. Same sale, two very different-looking figures — which is exactly why the two get mixed up.
Why the confusion costs money
The trap is setting price from a target margin by applying it as a markup. A business that wants a 60% margin and marks its 40 cost up by 60% prices at 64, giving a gross profit of 24 and a real margin of 37.5% — twenty-two points short of the target, on every unit sold.
The error is invisible in the pricing decision and obvious in the accounts, which is why it survives so long. It usually shows up as a business that is busy, growing, and not making the profit the owner expected.
Use the target-margin mode rather than doing this arithmetic in your head, and check the result against the margin readout: if you asked for 60% and it does not say 60%, something has gone wrong.
Margin can never reach 100% — markup can exceed it wildly
Margin is measured against the selling price, and profit is always less than that price as long as cost is greater than zero. So margin approaches 100% as cost approaches zero but never arrives. A reported margin at or above 100% means the cost is zero or negative, which almost always indicates a data error rather than a spectacular deal.
Markup has no such ceiling. Cost 10, sell 30, and the markup is 200% while the margin is 66.7%. The higher the markup, the closer the margin gets to 100% without reaching it, which is why a supplier quoting a '100% markup' is describing a 50% margin.
Zero cost makes markup undefined, not zero
If an item costs nothing — a free sample, a bundled giveaway, a write-off — the margin is 100% but the markup is a division by zero. It is undefined, not zero. Reporting 0% would tell you the opposite of the truth, so this tool states that the ratio is undefined and explains why.
The same applies in reverse when the selling price is zero: margin is undefined, though markup is not. Both cases are shown explicitly rather than being silently rendered as a confident zero.
Gross margin is not profit
Everything here is gross. It accounts for the cost of the goods, and nothing else. It does not include the cost of acquiring the customer, payment processing, shipping, returns, warehousing, software subscriptions, salaries or tax.
That matters because gross margin has to fund all of them. A business running at 30% gross margin may be profitable or may be losing money on every sale, depending entirely on what those other costs are. A 60% margin on a product that costs 90 to acquire is a loss — but it is a loss that this calculator, correctly, does not attempt to measure.
Use gross margin to price individual products and compare them against each other. Use a full profit-and-loss statement to know whether the business makes money.
Using the price table for a catalogue
When you are pricing a range rather than a single item, the useful question is not what one margin produces but how price and margin move together across the range. The table below shows the selling price at each common margin for the cost you entered, so you can see the curve rather than a single point.
Two patterns are worth noticing. The price rises steeply as margin approaches its ceiling, so chasing the last few points of margin can price you out of the market. And a fixed absolute profit target and a fixed percentage margin behave very differently across a product range: the percentage scales with cost, which tends to price expensive items high and cheap items too low to be worth selling. Many retailers deliberately use a lower percentage margin on high-cost items and a higher one on cheap accessories, for exactly that reason.
Remember also that this is one cost figure. If the same product has a different landed cost per batch, price from the worst realistic case rather than the best.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit divided by the selling price. Markup is profit divided by the cost. For an item costing 40 and selling at 100, the profit is 60 — a 60% margin but a 150% markup. Markup is always the larger figure, and the gap grows as margins rise.
Can profit margin exceed 100%?
No. Profit is always less than the selling price while cost is above zero, so margin approaches 100% but cannot reach it. A figure at or above 100% means the cost is zero or negative, which nearly always indicates a data entry error rather than a real result.
Can markup exceed 100%?
Yes, without limit. An item costing 10 and selling for 30 has a 200% markup and a 66.7% margin. A supplier describing a '100% markup' is describing a 50% margin, which is a useful thing to know when reading a price list.
How do I price for a target margin?
Divide the cost by one minus the target margin. For a 60% margin on a cost of 40, that is 40 ÷ 0.4 = 100. The common error is applying the target as a markup instead, which gives 64 and a real margin of 37.5% — twenty-two points below target on every unit sold.
Why does markup show as undefined for a free item?
Because markup divides by cost. At zero cost the division has no answer — it is undefined, not zero. Reporting 0% would say the opposite of the truth, since the margin on a free item is 100%. The same logic applies to margin when the selling price is zero.
What is a good gross margin?
It depends entirely on the category. Software and digital products commonly run far higher gross margins than physical retail, where freight, storage and returns absorb a large share of the price. Compare against your own category and your own history rather than a generic benchmark.
Does this include all my costs?
No. It is gross profit: the selling price less the cost of the goods only. It excludes payment processing, shipping, returns, warehousing, marketing, salaries, software and tax. Gross margin has to fund all of those, so it is not the same as profit.
Is my pricing data sent anywhere?
No. The calculation is local to your browser and nothing is transmitted or stored.