BUSINESS & ESTIMATING
Profit Margin vs. Markup
Stop underpricing. Calculate your true selling price based on the gross margin you need to hit.
How to Calculate Profit Margin vs. Markup
The calculator backs into a selling price from cost and target gross margin. It then calculates profit and expresses that profit as a percentage of cost to show the corresponding markup.
- Selling price = cost / (1 - target margin percentage / 100).
- Profit = selling price - cost; markup percentage = profit / cost x 100.
Frequently Asked Questions
How is gross margin different from markup?
Margin measures profit as a share of selling price; markup measures profit as a share of cost. They use different denominators, so the percentages are not interchangeable.
What happens if I enter a 100 percent target margin?
The selling-price formula divides by one minus the margin fraction, which is zero at 100 percent. A finite selling price requires a target margin below 100 percent.