Margin Calculator — gross profit margin from revenue and cost

How it works

Margin divides profit by revenue: (revenue − cost) ÷ revenue. It answers "what share of the sale is profit?" — the number finance teams track, because it maps directly onto revenue. Markup, by contrast, divides the same profit by cost, so a single sale has a higher markup than margin. This page reports both, then inverts the question: the sweep shows, for your cost, what price each target margin requires — price = cost ÷ (1 − margin) — since hitting a 40% margin is not the same as adding 40% to cost. That inversion is what separates a margin calculator from a markup one: markup prices up from cost, margin prices back from a profitability goal.

Worked example

Both anchor cases are published, by two independent sources. CFI: $500,000 of gross profit on $700,000 of revenue is a 71.4% margin (revenue $700k minus $200k cost). Wall Street Prep: $20,000 of gross profit on $120,000 of revenue is a 16.7% margin. On the default — $1,000 revenue, $600 cost — the margin is 40% and the profit $400, while the markup on the same figures is 66.7%: this calculator's computation of both from one revenue and cost.

Frequently asked questions

What is gross profit margin?

Profit as a percentage of revenue: (revenue − cost) ÷ revenue. On $700k of revenue with $200k of cost, the $500k profit is a 71.4% margin. It measures how much of each sales dollar survives the cost of what was sold, before overhead, taxes, and other expenses.

How is margin different from markup?

The denominator. Margin is profit ÷ revenue; markup is profit ÷ cost. The same $1,000/$600 sale is a 40% margin but a 66.7% markup. Margin is always the smaller number, and mixing them up misprices products — a target "40% margin" requires a 66.7% markup, not a 40% one.

What price do I need for a target margin?

Divide the cost by one minus the target margin: cost ÷ (1 − margin). A $600 cost priced for a 40% margin must sell for $1,000, not $840 (which would be a 40% markup and only a 28.6% margin). The sweep lists several targets and the price and markup each needs.

Why can't margin exceed 100%?

Because profit can never exceed revenue when cost is positive — you can't keep more than the whole sale. Margin approaches 100% only as cost approaches zero. Markup has no such ceiling: a $1 item sold for $100 is a 9,900% markup but a 99% margin.

Is this gross margin or net margin?

Gross — profit after only the cost of goods sold, which is what you enter. Net margin subtracts all other expenses (overhead, salaries, taxes, interest) and is lower. This page prices the gross figure; net margin needs a full expense breakdown.

Which do businesses actually use?

Both, for different jobs: margin to report profitability and compare against revenue, markup to set prices from supplier costs. A buyer negotiates on markup; an analyst reports on margin. Reporting both from one pair of numbers, as here, keeps the two conversations aligned.

How accurate is this, and what does it exclude?

The arithmetic is exact for the revenue and cost entered. It uses only the cost of goods sold, so it excludes operating expenses, taxes, discounts, and returns — all of which push net margin below this gross figure. Use it for pricing and gross profitability, not as a bottom-line profit measure.