What is the difference between margin and markup?

Both measure the gap between cost and price, but against different bases. Markup is profit as a percentage of COST: (price − cost) ÷ cost. Margin is profit as a percentage of the SELLING PRICE: (price − cost) ÷ price. For a $10 cost sold at $15, markup is 50% but margin is 33.3%. Margin is always the smaller number.

How do I calculate gross margin?

Gross margin % = (selling price − cost) ÷ selling price × 100. It tells you what share of each sale is gross profit before overheads.

What markup gives a 50% margin?

A 100% markup. To hit a target margin m, markup = m ÷ (1 − m). For a 50% margin you need to double cost (100% markup); for a 40% margin, a 66.7% markup.

Free tool

Margin & markup calculator

Turn cost and selling price into gross margin %, markup %, and profit — the two retail numbers everyone confuses.

CurrencyUnit costUSDSelling priceUSD

Gross profit / unit

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Margin (on price)

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Markup (on cost)

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Margin = (price − cost) ÷ price. Markup = (price − cost) ÷ cost. Margin is always the smaller number.

What is gross margin?

Gross margin is the percentage of each sale left after the cost of the goods, before overheads like rent and wages. At a $10 cost and $15 price, gross profit is $5 and gross margin is 5 ÷ 15 = 33.3%. To hit a target margin m, mark up by m ÷ (1 − m) — a 50% margin needs a 100% markup.

How it works

1
Enter your unit cost
The amount you pay your supplier for one unit, before tax.
2
Enter the selling price
The price the customer pays, before tax.
3
Read margin, markup and profit
The tool shows gross profit per unit, margin % (on price), and markup % (on cost) side by side.

Frequently asked

What is the difference between margin and markup?: Both measure the gap between cost and price, but against different bases. Markup is profit as a percentage of COST: (price − cost) ÷ cost. Margin is profit as a percentage of the SELLING PRICE: (price − cost) ÷ price. For a $10 cost sold at $15, markup is 50% but margin is 33.3%. Margin is always the smaller number.
How do I calculate gross margin?: Gross margin % = (selling price − cost) ÷ selling price × 100. It tells you what share of each sale is gross profit before overheads.
What markup gives a 50% margin?: A 100% markup. To hit a target margin m, markup = m ÷ (1 − m). For a 50% margin you need to double cost (100% markup); for a 40% margin, a 66.7% markup.

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