From selling price and cost, compute gross profit, gross margin percentage, and the corresponding markup percentage.
Input Data
Results
At a glance:Gross margin is profit as a percentage of the selling price, while markup is profit as a percentage of the cost.
Formula
profit = revenue - cost
marginPercent = profit / revenue × 100%
markupPercent = profit / cost × 100%
$$\text{Gross Profit} = \text{Revenue} - \text{Cost}$$$$\text{Margin \%} = \dfrac{\text{Gross Profit}}{\text{Revenue}} \times 100\%$$How to Use
- Enter the selling price (revenue).
- Enter the direct cost.
- Read the gross profit, gross margin percentage, and markup percentage.
FAQ
What is the difference between gross margin and net margin?
Gross margin only looks at selling price minus direct cost; net margin then deducts all operating expenses such as rent, wages, utilities and tax. So net margin is usually much lower than gross margin. This tool computes the gross margin, measuring profitability at the product level.
Why can't gross margin exceed 100%?
Because gross margin uses the selling price as its denominator, and the gross profit can at most equal the price (when cost is zero), so the maximum is 100%. Markup uses cost as its denominator, so the lower the cost the higher the markup can go above 100%. Don't confuse the two.
I know cost and markup but want the selling price — what do I use?
Use the Markup Calculator. Enter the cost and markup percentage and it returns the selling price, profit and the corresponding gross margin — the reverse of this tool.
How should gross margin, operating margin and net margin be read together?
These three are the 'three profit gates' down the income statement. Comparing their trends side by side pinpoints exactly where a company's profit is leaking or thickening — far more insightful than a single figure. (1) Gross margin = gross profit ÷ revenue, deducting only direct cost, reflecting the product's pricing power and sourcing efficiency. (2) Operating margin = operating profit ÷ revenue, further deducting operating expenses (rent, payroll, marketing, admin), reflecting core business efficiency. (3) Net margin = net profit ÷ revenue, deducting interest and tax too, reflecting the final take-home profitability. For example, high gross but low operating margin points to bloated operating costs (rent or headcount out of control); decent gross and operating but low net margin may signal heavy interest burden (excess leverage) or tax. Always look at all three layers together. Pair this with the site's gross margin, operating margin and net margin calculators.
Why can gross margin never exceed 100% while markup can?
The root cause is the different denominator. Gross margin = gross profit ÷ price × 100% (denominator is the price); markup = gross profit ÷ cost × 100% (denominator is the cost). For gross margin: gross profit = price − cost, and as long as cost is not negative (normally cost ≥ 0), gross profit is at most equal to the price, so 'gross profit ÷ price' is at most 1 (i.e. 100%, the extreme of zero cost) and can never exceed 100% — you can never earn more profit than the entire price you receive. For markup: its denominator is cost, and the gross profit (the gap between price and cost) can easily exceed the cost itself. Example: cost HK$40, price HK$100, profit HK$60, markup = 60 ÷ 40 = 150%, easily above 100%, and the higher the price the higher the markup, with no upper limit. That is why for the same deal the markup is always higher than the margin and can exceed 100% while the margin cannot. This matters: a merchant advertising 'doubled the price (100% markup)' sounds huge but is only a 50% gross margin — confusing the two seriously over- or under-states real profit.
References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.