Margin & Markup Calculator

Gross Margin vs. Markup: What is the difference?

One of the most common points of confusion in retail pricing is the difference between margin andmarkup. Both calculate profit relative to different baseline metrics:

• Gross Margin is profit divided by the selling price. It shows what percentage of your revenue is actual profit. For example, if you sell an item for $100 and it cost you $70 to acquire, your profit is $30, and your margin is ($30 / $100) × 100 = 30%.
• Markup is profit divided by the cost price. It shows how much you marked up the price relative to what you paid. Using the same numbers, your markup is ($30 / $70) × 100 = 42.86%.

Confusing these two can lead to pricing errors. If your product cost is $100 and you want to achieve a 30% gross margin, adding a 30% markup (selling for $130) will only yield a 23% gross margin. To achieve a true 30% margin, you must calculate:Selling Price = Cost / (1 - 0.30) = $100 / 0.70 = $142.86.