Gross Margin & Markup Calculator
Margin and markup describe the same dollar amount from two different angles, and confusing them costs companies money. This calculator shows both for any cost and price you enter.
Margin vs. markup — they are not the same
Both expressions describe the same gross profit, but with different denominators. A 50% markup is a 33.3% margin. A 50% margin is a 100% markup. Retailers usually quote markup; finance teams usually quote margin; the two groups frequently believe they are agreeing when they are not.
Quick conversion table
| Markup | Margin | Markup | Margin |
|---|---|---|---|
| 10% | 9.1% | 100% | 50.0% |
| 25% | 20.0% | 150% | 60.0% |
| 33% | 25.0% | 200% | 66.7% |
| 50% | 33.3% | 300% | 75.0% |
| 75% | 42.9% | 400% | 80.0% |
Which one to use
Use margin when comparing profitability across products, periods, or competitors, and when reporting to investors or lenders. It is bounded between 0% and 100% and aligns with how the income statement reports gross profit. Use markup when setting a sell price from a known cost — it answers "what do I add?" rather than "what fraction of revenue do I keep?"
Worked example
A boutique buys a dress for $40 wholesale and sells it for $100. Gross profit: $60. Markup: 150%. Margin: 60%. If the buyer instead aimed for a "60% markup" thinking they were targeting that margin, they would price the dress at $64 — destroying $36 of gross profit per unit, with no operational change to justify the difference.
Setting price from a target margin
To hit a 40% margin on a $30 cost: 30 ÷ (1 − 0.40) = $50. To hit a 40% markup on the same cost: 30 × 1.40 = $42. The first price keeps 40 cents of every revenue dollar; the second adds 40 cents of profit to every cost dollar.
Common pitfalls
- Mixing the two within one product line. If your category managers use markup and your CFO uses margin, agree on one term and convert the other on intake.
- Ignoring discounts. A 20% discount off a 40% margin item leaves a 25% margin, not 20%. Always recompute after promotions.
- Forgetting freight and shrinkage. Landed cost (purchase + freight + duty + shrink) is the right figure for both margin and markup, not just invoice price.