Profit Margin & Markup Calculator

Margin vs Markup: Fundamental Pricing Economics

Confusing profit margin with markup is one of the leading causes of enterprise cash flow deficits. - **Margin** expresses profit as a percentage of total selling price (revenue). - **Markup** expresses profit as a percentage of unit acquisition or manufacturing cost.

A 50% markup on a $100 product yields a $150 selling price—which equates to a 33.3% gross margin, NOT a 50% margin.

Worked example: margin versus markup

Enter a unit cost of 45, a target gross margin of 40%, and 500 units. The selling price is 45 / (1 - 0.40) = 75. Profit per unit is 30, while markup is 30 / 45 = 66.7%. The totals are 37,500 revenue, 22,500 cost, and 15,000 gross profit. A 40% markup would instead produce a price of 63, which is only a 28.6% margin.

Use the same currency for every input. The calculator does not convert currencies or automatically include taxes, shipping, returns, payment fees, or overhead. Include applicable per-unit costs yourself and distinguish gross profit from net profit. A 100% margin is undefined for a positive cost, so the calculation caps the target below 100%.