Margin Calculator
Enter your cost and selling price to get the gross margin, or a target margin to get the price or cost that reaches it.
Free, no sign-upRuns in your browserHow we calculate
- Revenue
- $100.00
- Cost
- $60.00
- Gross profit
- $40.00
- Gross margin
- 40%
| Target margin | Price on this cost | Profit |
|---|---|---|
| 10% | $66.67 | $6.67 |
| 20% | $75.00 | $15.00 |
| 30% | $85.71 | $25.71 |
| 40% | $100.00 | $40.00 |
| 50% | $120.00 | $60.00 |
| 60% | $150.00 | $90.00 |
How this was calculated
- Profit = price − cost = 100.00 − 60.00 = 40.00.
- Markup = profit ÷ cost = 40.00 ÷ 60.00 = 66.67%.
- Margin = profit ÷ price = 40.00 ÷ 100.00 = 40.00%.
Gross margin ignores overhead, tax and fees. Educational estimate, not financial advice.
How to calculate gross margin
A margin calculator tells you what share of your selling price is profit. Gross margin = (revenue − cost) ÷ revenue × 100. If an item costs you $60 and sells for $100, the gross profit is $40 and the margin is $40 ÷ $100 = 40%. Pick what you want to find above: the margin from a cost and a price, the price you need for a target margin, or the highest cost you can pay and still reach that margin.
Finding the price for a target margin
Divide the cost by one minus the margin: price = cost ÷ (1 − margin). For a 40% margin on a $60 cost the price is $60 ÷ 0.60 = $100. For a 25% margin on the same cost it is $60 ÷ 0.75 = $80. The table under the result shows this price for margins from 10% to 60%, so you can see what each extra point of margin costs your customer.
Margin is not markup
Markup divides the profit by the cost instead of the price. The $40 profit on a $60 cost is a 66.7% markup but a 40% margin. Margin is always the smaller figure, and it can never reach 100%, because that would mean the item cost nothing. Adding your target margin to the cost is the classic pricing error: $60 plus 40% is $84, which gives a margin of only 28.6%. Use the markup calculator when you think in markup, or the profit calculator to add fixed costs and see the break-even point.
What gross margin leaves out
Gross margin only subtracts the direct cost of what you sell (materials, goods, production labor). Rent, wages, advertising, card fees, shipping and returns come out of it afterwards, so net margin is always lower. A store with a 40% gross margin may keep 5–10% after all expenses, which is why comparing gross margins across industries says little. Compare your margin with other businesses that sell the same kind of product, and check it again whenever your supplier changes its prices.
Related calculators
Work out discounts with the discount calculator, percentages with the percentage calculator and returns with the ROI calculator.
Frequently asked questions
How do you calculate gross margin?
Gross margin = (revenue − cost) ÷ revenue × 100. An item that costs $60 and sells for $100 has a margin of $40 ÷ $100 = 40%.
How do you find the price for a target margin?
Price = cost ÷ (1 − margin). For a 40% margin on a $60 cost the price is $60 ÷ 0.60 = $100.
What is the difference between margin and markup?
Margin divides profit by the selling price, markup divides it by the cost. A $40 profit on a $60 cost is a 40% margin and a 66.7% markup.
What is a good profit margin?
It depends on the industry. Software and luxury goods often have gross margins above 60%, grocery and fuel retail only 10–25%. Compare with businesses that sell similar products.
Can a margin be 100%?
No. A 100% margin would mean the item cost nothing. Margin is always below 100%.