Margin vs markup
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. Same profit, different base — so markup is always the bigger number.
| Markup | Margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
Worked example
An item costs $40 and sells for $65. Profit is $25. Margin = 25 ÷ 65 = 38.5%. Markup = 25 ÷ 40 = 62.5%. To hit a 40% margin you would charge 40 ÷ (1 − 0.40) = $66.67.
Profit Margin Calculator FAQs
What is a good profit margin?
It varies hugely by industry: grocery stores often run on low single-digit net margins, while software can be much higher. Compare with businesses like yours.
Is this gross or net margin?
Gross margin — it uses the direct cost of the item. Net margin also subtracts rent, wages, ads and other overheads.
Is my information saved or sent anywhere?
No. Everything is calculated in your browser and nothing is sent to a server.