📊 Business & Finance

Profit Margin Calculator

Calculate gross margin, markup, and selling price from cost and target margin. Free.

Margin

How to use

1

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).

2

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.