Profit Margin Calculator
Calculate gross margin, markup, and selling price from cost and target margin. Free.
How to use
Margin vs markup
This is the most confused thing in pricing. Margin = profit as % of selling price. Markup = profit as % of cost. If you buy at £10 and sell at £20, your markup is 100% but your margin is 50%. To convert: margin = markup ÷ (1 + markup).
Typical retail margins
Grocery 1-3% (volume game) · Restaurants 3-5% net (much higher gross) · Clothing 50-65% · Jewellery 50% · Electronics 5-25% · SaaS software 70-85%. The lower the margin, the higher the volume needed to make the business viable.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. A product costing 10 and selling for 15 has a 33.3% margin but a 50% markup.
How do I calculate selling price from a target margin?
Divide the cost by (1 minus the margin as a decimal). For a cost of 10 and a 40% margin: 10 / 0.6 = 16.67.
Does gross margin include overheads?
No. Gross margin only subtracts the direct cost of the goods or service. Net margin also accounts for overheads, tax and interest.