Margin calculator
Margin is profit as a share of PRICE; markup is profit as a share of COST. This calculator shows both for the same numbers, which is the cure for the most expensive confusion in retail.
Margin is measured against the price
Gross margin is profit divided by the selling price: buy at $60, sell at $100, and the margin is $40 ÷ $100 = 40%. The denominator is what distinguishes it from markup, which divides the same $40 by the $60 cost and reports 66.7%.
Both describe the identical transaction. Quoting one while thinking of the other is the most common pricing error in retail, and it always errs in the direction of thinking you make more than you do.
Which one to price with
Price with markup, because it starts from the number you actually know — what you paid. Report and compare with margin, because it is measured against revenue and so is comparable across products, categories and competitors.
A useful anchor: a 100% markup is a 50% margin, and a 50% markup is a 33.3% margin.
Frequently asked questions
What margin should I target?
Category-dependent — but whatever you target, track it monthly per category. Drift in margin is the earliest signal of pricing, cost or shrinkage problems.
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