Enter what something costs and what you sell it for to get gross profit, profit margin, and markup instantly. Or work backward: set a target margin and find the price you need to charge. Stop confusing margin with markup.
What it costs you per unit.
What you charge per unit.
Keep the cost above, then aim for a target.
Same gross profit, two different bases. Markup is always the bigger number.
| Markup | Equivalent margin | Margin | Equivalent markup |
|---|
Margin ≠ markup
Markup is profit over cost; margin is profit over price. Add 40% to your cost and you get a 28.6% margin, not 40%. To actually hit a 40% margin, divide cost by 0.60. Getting this wrong quietly erodes profit on every sale.
Gross vs net
This is your gross margin — price minus the direct cost of the unit. Net margin also subtracts overhead, salaries, marketing, and tax. Healthy gross margin is the room you have to cover everything else and still profit.
Price is the strongest lever
A 1% price increase usually beats a 1% cost cut, because it drops straight to the bottom line with no extra effort. Use the target-margin tool to see exactly what price a given margin requires before you discount.
Profit margin = (price − cost) ÷ price × 100. It's profit as a percentage of the price you charge. A product costing 60 sold for 100 has 40 gross profit and a 40% margin. Margin can't reach 100% unless cost is zero.
Both measure the same gross profit against different bases. Margin = profit ÷ price; markup = profit ÷ cost. A 60-cost item sold for 100 has a 40% margin but a 67% markup. Markup is always larger — marking cost up 40% only yields a 28.6% margin.
Selling price = cost ÷ (1 − target margin). For a 40% margin on a 60 cost: 60 ÷ 0.60 = 100. Don't just add 40% to cost — that's a markup and gives a lower margin than intended.
Margin = markup ÷ (1 + markup), so a 50% markup is a 33.3% margin. The reverse: markup = margin ÷ (1 − margin), so a 50% margin is a 100% markup. The table above shows both directions.
It's industry-dependent. Grocery and retail run thin 5–15% net margins on volume; software can top 70–80% gross margin; restaurants and agencies sit in between. Gross margin is always higher than net margin, which also absorbs overhead and tax. Compare against peers in your sector, not a universal number.
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