The Margin Calculator works out gross margin, gross profit, revenue, or cost from any two of these values. Fill in any two fields and click Calculate — the calculator finds the rest.
The margin calculator is a flexible business tool that links the four key numbers in any sale — the cost of the goods, the revenue you sell them for, the gross profit you make, and the gross margin percentage. Enter any two of these and the calculator instantly works out the other two, so you can price a product, check a deal's profitability, or reverse-engineer what something must have cost. It is one of the most useful everyday calculations in retail, wholesale, manufacturing, and services.
Margin is the single most important measure of how profitable a sale is, because it expresses profit as a proportion of revenue rather than as a raw dollar amount. That makes it comparable across products of wildly different prices — a 40% margin means the same thing whether you are selling a $5 item or a $5,000 one. This calculator takes the arithmetic off your plate so you can focus on the decision.
Gross margin (also called gross profit margin) is the percentage of your revenue that is left after subtracting the cost of the goods sold. If a product costs you $30 and you sell it for $50, your gross profit is $20, and your gross margin is $20 ÷ $50 = 40%. In other words, 40 cents of every dollar of revenue is gross profit; the other 60 cents went to covering the cost of the product.
Gross margin is a measure of efficiency and pricing power. A higher margin means you keep more of every sale to cover your other expenses — rent, salaries, marketing, taxes — and, ultimately, to turn into net profit. It is one of the first numbers investors, lenders, and business owners look at when judging the health of a business.
All four quantities are tied together by two simple relationships, and the calculator rearranges them depending on which two values you provide:
gross profit = revenue − cost
gross margin = 100 × profit ÷ revenue = 100 × (revenue − cost) ÷ revenue
revenue = 100 × profit ÷ margin
cost = revenue − margin × revenue ÷ 100
These four equations are really two ideas seen from different angles: profit is what's left after cost, and margin is that profit expressed as a percentage of revenue. Because they are linked, knowing any two of cost, revenue, profit, and margin is enough to pin down the other two exactly — which is what makes this calculator so flexible.
Fill in exactly two of the four fields and click Calculate. Some of the most common combinations are:
The calculator reports all four values plus the markup, so you always get the full picture from whichever two numbers you happen to have.
The most common and costly mistake in pricing is confusing margin with markup. They both describe the gap between cost and selling price, but they measure it against different bases:
For the same sale, markup is always the larger number. In our example — cost $30, revenue $50, profit $20 — the margin is $20 ÷ $50 = 40%, but the markup is $20 ÷ $30 = 66.67%. A business owner who wants a 40% margin but mistakenly marks up cost by 40% would price the item at $42 and end up with a margin of only about 28.6% — a serious shortfall that eats into profit on every single sale. This is why the calculator shows both figures: so you can price deliberately and never mix them up. To convert a desired margin into the markup you need to apply, use markup = margin ÷ (1 − margin), with margin as a decimal.
It is important to know exactly what this calculator measures. Gross margin considers only the direct cost of goods sold (COGS) — the cost of the product or the materials and labor to make it. It does not subtract the many other costs of running a business, such as rent, utilities, salaries of non-production staff, marketing, insurance, or taxes.
Net margin, by contrast, is what's left after all expenses, and it is always lower than gross margin. A shop might have a healthy 50% gross margin but only a 5% net margin once overhead is paid. Both matter: gross margin tells you whether your core product pricing works, while net margin tells you whether the whole business is profitable. This tool focuses on gross margin, the foundation on which net profitability is built.
There is no single "good" margin — it varies enormously by industry. Grocery stores and other high-volume retailers often run on razor-thin gross margins of a few percent, making their money on turnover. Software and luxury-goods companies can enjoy gross margins of 80% or more, because the cost of producing one more copy or unit is very low. Restaurants, manufacturers, and service firms all sit somewhere in between. As a rough general guide, a gross margin of around 20% is often considered modest, 40% healthy, and 60% or above strong — but the only meaningful comparison is against others in your specific industry. What matters most is understanding your own margins and watching how they trend over time.
Suppose you run a shop and buy an item for $30, then sell it for $50. Using the calculator: enter the cost ($30) and the revenue ($50). The gross profit is $50 − $30 = $20. The gross margin is 100 × $20 ÷ $50 = 40%. And the markup, for comparison, is 100 × $20 ÷ $30 ≈ 66.67%. Now imagine your supplier raises the cost to $35 but you keep the price at $50: your profit falls to $15 and your margin drops to 30% — a big hit from a modest cost increase. The calculator lets you test scenarios like this in seconds, so you can decide whether to raise your price, absorb the cost, or find a cheaper supplier.
Because margin and markup describe the same profit against different bases, it is often necessary to convert one to the other — especially when a supplier quotes a markup but you think in margins, or vice versa. The conversions are straightforward once you have them written down. To turn a margin into a markup, use markup = margin ÷ (1 − margin). To go the other way, from a markup into a margin, use margin = markup ÷ (1 + markup). In both cases the percentages are written as decimals. For example, a 40% margin (0.4) becomes a markup of 0.4 ÷ 0.6 = 0.6667, or 66.67%; and a 50% markup (0.5) becomes a margin of 0.5 ÷ 1.5 = 0.3333, or 33.33%. Keeping these two conversions handy prevents the single most expensive pricing error in retail. This calculator sidesteps the whole problem by showing you both figures at once whenever you calculate.
One reason margins are so valuable is that they normalize profit into a percentage, but it is worth remembering that you ultimately pay your bills with dollars, not percentages. A high margin on a cheap item can produce less actual profit than a modest margin on an expensive one: a 70% margin on a $5 product yields $3.50, while a 20% margin on a $100 product yields $20. Smart pricing looks at both the percentage margin and the absolute gross profit per unit, then multiplies by the volume you expect to sell. The margin percentage tells you how efficient each sale is; the dollar profit tells you how much you actually take home. Use this calculator to see both the margin and the gross profit side by side so neither perspective gets lost.
If your margins are thinner than you would like, there are really only a few levers to pull, and this calculator helps you model each one. You can raise prices, which lifts revenue and margin directly — even a small increase flows straight to the bottom line, though you must weigh the effect on demand. You can reduce costs by negotiating with suppliers, buying in larger volumes, or streamlining production, which widens the gap between cost and revenue. You can change your product mix to emphasize higher-margin items. Or you can reduce waste and shrinkage, which quietly erodes effective margins in many businesses. Before committing to any of these, plug the new numbers into the calculator to see exactly how much each change moves your margin and profit — the results are often surprising, and a change that feels small can have an outsized effect.
Subtract the cost from the revenue to get the gross profit, then divide the profit by the revenue and multiply by 100. In symbols, margin = 100 × (revenue − cost) ÷ revenue. For a $30 cost and $50 revenue, that is 100 × 20 ÷ 50 = 40%.
Margin is profit as a percentage of the selling price (revenue); markup is profit as a percentage of the cost. For the same sale, markup is always the higher figure — a 40% margin corresponds to a 66.67% markup. Confusing the two leads to underpricing.
Enter your cost and your desired margin, and the calculator returns the required revenue (selling price). The formula is revenue = cost ÷ (1 − margin), with the margin written as a decimal. For a $30 cost and a 40% target margin, the price is $30 ÷ 0.6 = $50.
No. Because margin is profit divided by revenue and profit can never exceed revenue (cost is not negative), gross margin is always less than 100%. Markup, however, can exceed 100% when the selling price is more than double the cost.
Gross profit is the dollar amount left after subtracting the cost of goods sold from revenue: gross profit = revenue − cost. It is the raw money made on the sale before other business expenses are considered.
No. It calculates gross margin, which reflects only the direct cost of goods sold. Operating expenses, overhead, and taxes reduce your net margin further. Use gross margin to evaluate product pricing and net margin to judge overall business profitability.
This Margin Calculator is provided for educational and general informational purposes. It computes gross margin, gross profit, revenue, and cost, and does not account for operating expenses, overhead, or taxes. Consult a qualified accountant or financial professional for business and pricing decisions.