Gross Margin Calculator
Find gross profit, markup percent, and margin percent from cost and price.
What it does
Gross margin shows how much of each sales dollar stays as gross profit after covering the cost of goods sold. It is a core profitability measure for pricing and product decisions.
The tool above takes cost and price, then shows gross profit, markup percent, and margin percent. Enter your numbers and read the result.
Markup divides profit by cost: how much you add on top of what you paid. Margin divides profit by price: how much of the selling price is gross profit.
For the same sale, markup always reads higher than margin because cost is smaller than price when profit is positive.
Gross margin is not net profit. Rent, wages, taxes, and other operating costs come out of gross profit before the business keeps anything.
How to use
- Enter the cost to make or buy one unit.
- Enter the price you charge for one unit.
- Read gross profit first.
- Read markup percent next.
- Read margin percent last.
Formula
- cost
- Cost to make or buy one unit, in dollars.
- price
- Selling price of one unit, in dollars.
- gross profit
- Price minus cost, in dollars.
- markup
- Profit divided by cost, as a percent.
- margin
- Profit divided by price, as a percent.
If cost is zero, markup is undefined and the tool shows it as not applicable. Price must be above zero. This is gross margin per unit before operating expenses.
Worked example
Example: $75 cost, $125 price
Cost 75, price 125.
- Gross profit: 125 - 75 = $50.00.
- Markup: 50 / 75 x 100 = 66.67 percent.
- Margin: 50 / 125 x 100 = 40 percent.
- Tool shows gross profit $50.00, markup 66.67%, margin 40%.
Reference table
| Cost | Gross profit | Markup | Margin |
|---|---|---|---|
| $80 | $45.00 | 56.25% | 36.00% |
| $75 | $50.00 | 66.67% | 40.00% |
| $60 | $65.00 | 108.33% | 52.00% |
| $90 | $35.00 | 38.89% | 28.00% |
Limits
- This is a per-unit model with one cost and one price.
- It does not include fixed costs, overhead, taxes, or discounts.
- Volume pricing and bundles are not modeled.
- Profit here is gross profit per unit, not net income.
Common mistakes
- Confusing gross margin with net profit margin.
- Using price as the base for markup instead of cost.
- Assuming a 66.67% markup means a 66.67% margin.
- Ignoring overhead and fixed costs when setting price.
- Entering a cost above price, which gives negative profit.
Try it yourself
Quick checks. Answers sit tucked under each question.
$30 cost, $45 price?
Gross profit $15.00, markup 50%, margin 33.33%.
$20 cost, $50 price?
Gross profit $30.00, markup 150%, margin 60%.
$100 cost, $150 price?
Gross profit $50.00, markup 50%, margin 33.33%.
Questions
What is gross margin?
Gross profit divided by price, as a percent. It shows how much of each sales dollar is gross profit.
How is gross margin different from markup?
Margin divides profit by price; markup divides profit by cost. Markup reads higher for the same sale.
Is gross margin the same as net profit?
No. Gross margin is before operating expenses; net profit is after all costs, taxes, and interest.
Which should I use to price?
Retailers often use markup; analysts often use margin. Pick one and stay consistent.
Can cost be zero?
Markup is undefined at zero cost, so the tool flags it.