Worldwide
Margin calculator
Gross profit margin is the share of a selling price that is profit rather than cost, written as a percentage. Enter the price you sell at and the cost to you, and this tool returns the margin, the cash profit per unit, and the markup that the same sale represents. Margin is the figure most accountants and retailers mean when they talk about profitability, because it answers a clear question: out of every unit of revenue, how much do you keep before overheads. That makes it easy to compare products, departments or whole businesses on the same scale, regardless of how cheap or dear each item is. It is not the same as markup, which measures the same profit against the cost instead of the price, so margin is always the lower of the two percentages. This calculator works in gross terms, price minus cost, so the result is profit before rent, wages, tax and the other running costs that turn gross margin into the much smaller net margin a business actually banks.
Gross profit margin is the profit as a share of the selling price, the figure most accounts and retailers mean by "margin". It is always smaller than the markup on the same sale, because the price you divide by is larger than the cost. This is gross margin before overheads, wages, tax and other running costs, so the money you keep is lower again.
How it works
- Enter the selling price, the amount the customer pays you before any sales tax.
- Enter the cost price, what the item cost you to buy or produce.
- The tool subtracts the cost from the price to find the profit on each unit.
- It divides that profit by the selling price to give the gross profit margin as a percentage.
- It also shows the equivalent markup, the same profit measured against the cost, and flags any sale made below cost.
margin = (price - cost) / price x 100; profit = price - cost
The profit on a sale is the selling price minus the cost. Dividing that profit by the selling price and multiplying by a hundred gives the gross margin as a percentage of revenue. Dividing the same profit by the cost instead gives the markup. Because you always divide by a larger number for the margin, it comes out lower than the markup. To go the other way and find the price for a chosen margin, divide the cost by one minus the margin written as a decimal.
- price
- the selling price before sales tax
- cost
- what the item cost you
- profit
- price minus cost, before overheads
- margin
- profit as a percentage of the price
A margin and the markup behind it
| 10% margin | 11.1% markup | thin, typical of grocery |
| 25% margin | 33.3% markup | common general retail |
| 50% margin | 100% markup | price is double the cost |
| 75% margin | 300% markup | high, as on bar drinks |
Worked example
You sell an item for 70 that cost you 50: the profit is 20 per unit. As a margin that is 20 divided by 70, about 28.6 percent of the selling price. The same 20 against the 50 cost is a 40 percent markup. So a product described as carrying a 40 percent markup keeps 28.6 percent of its revenue as gross profit.
Key facts
- Gross margin can never reach 100 percent, because profit cannot exceed the price it is measured against.
- For the same sale the margin is always lower than the markup; a 50 percent margin equals a 100 percent markup.
- Margin lets you compare a 5 item and a 500 item on the same footing, which is why it is the standard profitability measure.
- Gross margin sits well above net margin; a shop with a 40 percent gross margin might keep only a few percent after all its costs.
Tips
- To price for a target margin, divide the cost by one minus the margin as a decimal rather than just adding a percentage on.
- Track gross margin by product line, since a few low-margin sellers can drag down an otherwise healthy range.
- Remember the gap to net profit: a strong gross margin still has to cover rent, wages, fees and tax.
- When a supplier raises a cost, recompute the margin rather than assuming the old selling price still works.
Frequently asked questions
What counts as a good profit margin?+
It varies widely by sector. Supermarkets run on low single-digit gross margins on groceries, software can exceed 80 percent, and most retail and hospitality sit somewhere between. Compare against others in your own trade rather than a single benchmark.
How is margin different from markup?+
Margin divides profit by the selling price; markup divides the same profit by the cost. The price is larger than the cost, so the margin percentage is always smaller than the markup for one sale.
Is this gross margin or net margin?+
Gross. It is price minus cost over price. Net margin takes off overheads, wages, tax and interest too, and is always lower, sometimes much lower, than the gross figure shown here.
How do I work backwards from a target margin to a price?+
Divide the cost by one minus the margin as a decimal. To hit a 30 percent margin on a 50 cost, divide 50 by 0.70, which gives a selling price of about 71.43.
Can a margin be negative?+
Yes. If you sell below cost the profit is negative and so is the margin, which means a loss on every unit. The tool marks this as selling below cost.
Things to watch
- This is gross margin only; overheads, wages, payment fees and tax all reduce it to a smaller net margin.
- Comparing your margin to one from another industry can mislead, as healthy levels differ sharply by sector.
- A positive gross margin does not guarantee an overall profit if fixed costs are not covered by the volume you sell.
Last updated: 2026
This is an estimate for general guidance, not financial, tax, legal or medical advice. Figures can change and individual circumstances vary. Always confirm with the official sources listed before making decisions.
Reviewed by Vikas Dulgunde. Editorial standards.