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Margin Calculator

Calculate gross profit, profit margin, and markup from revenue and cost.

Best for: Calculate gross profit, gross margin, and markup from revenue and cost.

Your assumptions

Calculate your estimate

Your result

Margin estimate

Gross margin
40%
Gross profit
$60.00
Markup on cost
66.67%

How to use this margin calculator

Use this margin calculator to separate gross profit, profit margin, and markup. These measures use the same revenue and cost but different denominators, which is why a target markup does not produce the same percentage margin.

  1. 1

    Enter revenue and direct cost

    Use the selling price or total revenue and the cost directly associated with producing or acquiring the item.

  2. 2

    Compare margin with markup

    Read profit as a share of revenue and markup as a share of cost; do not use the terms interchangeably.

  3. 3

    Test price and cost changes

    Adjust one variable at a time to see how discounts or supplier increases affect gross economics.

Worked planning example

Example: measure the effect of a discount

Set up

Enter the current selling price and direct cost to establish the base gross margin.

Compare

Lower the selling price by the proposed discount while keeping cost constant, then compare gross profit and margin.

Takeaway

A modest price reduction can require a much larger sales-volume increase to preserve total gross profit.

Use the right cost definition

Gross margin can look strong while overhead, returns, shipping, commissions, and financing still reduce net profit.

  • Define direct cost consistently across comparisons.
  • Include transaction-level costs when evaluating an offer.
  • Model the volume needed to offset a lower margin.

Calculation methodology and assumptions

For this margin estimate, Silvia uses selling price or revenue, cost. Calculate gross profit, profit margin, and markup from revenue and cost. Results are estimates, not quotes, tax advice, or investment recommendations.

Frequently asked questions

What is the difference between margin and markup?

Margin divides profit by revenue, while markup divides profit by cost. The percentages are different even when revenue, cost, and profit are unchanged.

Does gross margin include operating expenses?

Usually not. This calculator uses entered revenue and cost. Rent, payroll, marketing, taxes, interest, and other overhead must be considered separately unless included in the cost input.

Can profit margin be negative?

Yes. When cost exceeds revenue, gross profit and margin are negative. Review the cost basis and selling-price assumptions before relying on the result.

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