Quick Answer

A product that sells for $100 with a $60 cost has a gross profit of $40, a profit margin of 40%, and a markup of 66.67%.

Revenue / Selling Price ($)

Cost / COGS ($)

Common Examples

Input	Result
$100 revenue, $60 cost	$40 profit, 40% margin, 66.67% markup
$50 revenue, $30 cost	$20 profit, 40% margin, 66.67% markup
$250 revenue, $175 cost	$75 profit, 30% margin, 42.86% markup
$1,000 revenue, $400 cost	$600 profit, 60% margin, 150% markup

How It Works

This calculator uses three standard profitability formulas:

Gross Profit = Revenue - Cost

Gross Margin = (Gross Profit / Revenue) x 100

Markup = (Gross Profit / Cost) x 100

Where:

• Revenue = the total selling price or income from sales
• Cost = the cost of goods sold (COGS) or the cost to produce/acquire the item
• Gross Profit = the dollar amount remaining after subtracting costs from revenue
• Gross Margin = profit expressed as a percentage of revenue (the seller’s perspective)
• Markup = profit expressed as a percentage of cost (the buyer’s or pricing perspective)

The Difference Between Margin and Markup

Margin and markup both describe profitability, but from different reference points. A 50% margin means half of the selling price is profit. A 50% markup means the profit is half of the cost. These are not the same. A 50% margin corresponds to a 100% markup, and a 50% markup corresponds to a 33.33% margin.

The relationship between the two:

Markup = Margin / (1 - Margin/100) x 100

Margin = Markup / (1 + Markup/100) x 100

Worked Example

A retailer buys a product for $60 and sells it for $100. Gross profit = $100 - $60 = $40. Gross margin = $40 / $100 x 100 = 40%. Markup = $40 / $60 x 100 = 66.67%. The retailer keeps 40 cents of every revenue dollar as gross profit, and the selling price is 66.67% above the wholesale cost.

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Frequently Asked Questions

What is profit margin?

Profit margin is the percentage of revenue that remains as profit after subtracting costs. A 40% profit margin means that for every $1 in revenue, $0.40 is profit. It is one of the most common metrics for evaluating business profitability.

What is the difference between margin and markup?

Margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. They describe the same profit from different perspectives. A 25% margin equals a 33.33% markup. A 50% margin equals a 100% markup. Markup is always a larger number than margin for the same transaction.

What is a good profit margin?

Profit margins vary widely by industry. Grocery stores may operate on 1% to 3% net margins, while software companies may achieve 60% to 80% gross margins. Comparing margins within the same industry gives a more meaningful benchmark than comparing across industries.

Does this calculate gross or net margin?

This calculator computes gross margin based on the revenue and cost values you provide. Net margin would additionally subtract operating expenses, taxes, and interest, which this calculator does not include. Gross margin is the first-level profitability metric.

Can profit margin be negative?

Yes. A negative profit margin means costs exceed revenue, resulting in a loss. For example, if a product sells for $80 but costs $100 to produce, the gross margin is -25%. This indicates the business is losing money on each unit sold at that price.