Margin, markup, target selling price, and gross, operating and net margin in one free calculator.
Enter the selling price and what it costs you.
NinjaFunction's Profit Margin and Markup Calculator turns a price and a cost into the profit, the margin and the markup, finds the selling price needed for a target margin or markup, and works out gross, operating and net margin from a simple income statement. It explains why margin and markup are not the same. Everything runs in your browser.
| Markup on cost | Equal margin on price | Cost 100 sells at |
|---|---|---|
| 25% | 20.0% | 125 |
| 50% | 33.3% | 150 |
| 100% | 50.0% | 200 |
| 200% | 66.7% | 300 |
| Line | Amount | Margin |
|---|---|---|
| Revenue | 1,000 | 100% |
| Cost of goods sold | 600 | |
| Gross profit | 400 | 40% |
| Operating expenses | 250 | |
| Operating profit | 150 | 15% |
| Interest and tax | 50 | |
| Net profit | 100 | 10% |
Sales can grow while profit shrinks. If your costs rise by 5% and you keep prices the same, a 20% margin falls to roughly 16%, and the owner often notices only when cash runs short. Calculating the margin every month, for each product line, shows which items earn their place on the shelf and which only look busy.
Gross margin is the first number to watch, because it shows whether the product itself pays. If it is healthy but net margin is poor, the problem is in running costs. If gross margin is thin, the problem is in price or purchasing.
Take a product that costs 80 and sells for 100, a 20% margin. Offer 10% off and the price is 90, so the profit falls from 20 to 10 a unit: it has halved. To make the same total profit you must now sell twice as many units. That is why a discount that sounds small can hurt so much when margins are thin, and why it pays to check this before starting a sale.
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. For a product that costs 100 and sells for 150, the profit is 50, the margin is 33.3% and the markup is 50%.
Because both come from the same two numbers. The danger is pricing: a 50% markup is not a 50% margin. To get a 50% margin on a cost of 100 you must sell at 200, which is a 100% markup.
Divide the cost by (1 − margin). For a cost of 100 and a 25% margin, the price is 100 ÷ 0.75 = 133.33. The Find the price tab does this for you.
Gross margin takes only the cost of goods off revenue. Operating margin also subtracts running costs such as rent and salaries. Net margin subtracts everything, including interest and tax.
It varies a lot by trade. Groceries often have net margins of 1% to 3%, restaurants 3% to 9%, software and consulting much higher. Compare with your own industry.
If you count it as a real cost, yes. Many small businesses look profitable only because the owner is not paid. Include a fair wage to see the true margin.