Profit Margin Calculator
Cost, sell price → profit, margin and markup.
Last updated: January 2025 · Built for the 2024–25 financial year
Inputs
Results
Gross profit
$40.00
Margin
40%
Markup
66.67%
Results are estimates only. For financial advice, consult a licensed adviser.
Overview
Markup vs margin — the difference that costs businesses
Markup is profit divided by cost. Margin is profit divided by revenue. They are not the same: a 50% markup is a 33% margin, and a 100% markup is a 50% margin.
Confusing them under-prices product. Distributors usually quote markup; retailers usually quote margin. Always confirm which lens the supplier is using.
Formula
Markup vs margin
Markup % = (price − cost) / cost Margin % = (price − cost) / price Price from margin = cost / (1 − margin%)
Worked example
Cost $40, sell for $60
- Profit = $20.
- Markup = 20 / 40 = 50%.
- Margin = 20 / 60 = 33.3%.
Answer: 50% markup = 33.3% margin
Industry benchmark gross margins
| Factor | Detail |
|---|---|
| Software / SaaS | 70-90% |
| Restaurants | 60-70% (food only) |
| Specialty retail | 40-50% |
| Supermarkets | 20-30% |
| Wholesale distribution | 10-25% |
Pro tips
- •Quote prices from margin, not markup, to avoid under-pricing.
- •Never discount below your contribution margin floor.
- •Watch GST: margins are calculated on ex-GST figures.