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Finance • Profit Margin & Markup Calculator

Profit Margin & Markup Calculator

Calculate profit margin percentage, markup percentage, and gross profit from selling price and cost of goods.

Profit Margin
33.3%
Markup
50.0%
Gross Profit
$50
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Calculation Guide & Reference

Profit Margin & Markup Mathematics

Profit margin calculator computes profit margin percentage, markup percentage, and gross profit from selling price and cost of goods sold.

Standardized Mathematical Formula
Margin % = (Revenue − Cost) ÷ Revenue × 100 | Markup % = (Revenue − Cost) ÷ Cost × 100

Margin and markup both measure profit but use different denominators: margin expresses profit as a percentage of the selling price (revenue), while markup expresses the same dollar profit as a percentage of the cost. The two are frequently confused but produce meaningfully different numbers for the same sale.

Variables:
Revenue:Selling price of the product or service
Cost:Cost of goods sold (COGS) — what it cost you to produce or acquire the item
Gross Profit:Revenue − Cost
How It Works (Step-by-Step)
  • 1Enter the selling price (revenue) and the cost of goods.
  • 2View the gross profit, profit margin percentage, and markup percentage.
Real-World Numerical Example
Selling at $150 with a $100 Cost

A product costs $100 to produce and sells for $150.

•Gross profit: $150 − $100 = $50.
•Margin: $50 ÷ $150 × 100 = 33.3%.
•Markup: $50 ÷ $100 × 100 = 50%.
Result: The sale has a 33.3% profit margin and a 50% markup — two different numbers describing the same $50 profit.
Calculation Best Practices & Tips
Distinguish between Nominal Interest Rate (APR) and Effective Annual Yield (APY) when comparing loans or investments.
Small additional monthly principal payments on mortgages can dramatically shorten amortization schedules and save tens of thousands in cumulative interest.
Factor in inflation when forecasting long-term investment purchasing power over 10-30 year time horizons.

Frequently Asked Questions (FAQ)

Margin divides profit by the selling price (revenue); markup divides the same profit by the cost. A 50% markup on a $100 cost item ($150 selling price) is only a 33.3% margin — they are never equal except at 0% profit.

Use Price = Cost ÷ (1 − Target Margin). For example, to achieve a 30% margin on a $70 cost item: $70 ÷ (1 − 0.30) = $70 ÷ 0.70 = $100 selling price.

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