Gross Margin Mark Up Calculator

How to use the gross margin and markup calculator

Enter product cost, selling price, and quantity to calculate gross margin, markup, profit per unit, total revenue, total cost, and total gross profit.

You can also switch modes to calculate selling price from a target markup or target gross margin. This is useful when setting prices from cost data or checking whether a proposed price meets your margin goal.

Gross margin formula

Gross margin measures gross profit as a percentage of selling price. The formula is: Gross Margin = (Selling Price - Cost) / Selling Price x 100.

Gross margin tells you how much of each revenue dollar remains after covering the direct cost of the product or service.

Markup formula

Markup measures gross profit as a percentage of cost. The formula is: Markup = (Selling Price - Cost) / Cost x 100.

Markup is often used to set prices because it starts with the cost base. Gross margin is often used to evaluate profitability because it starts with the final selling price.

Gross margin vs markup

Gross margin and markup are related, but they are not the same number. For example, a product that costs $60 and sells for $100 has a 40% gross margin and a 66.7% markup.

Confusing markup with margin can lead to pricing mistakes. A 40% markup does not produce a 40% margin; it produces a lower margin because margin is measured against selling price.

Common pricing mistakes

The most common mistake is setting price from product cost alone without considering overhead, payment fees, returns, discounts, taxes, shipping, and customer acquisition costs.

Use margin and markup together with break-even analysis, sales volume, competitor pricing, and target profit goals before finalizing a price.

• Use gross margin to compare profitability across products.
• Use markup when building prices from cost.
• Include discounts and fees in realistic pricing scenarios.
• Watch how cost increases can quickly reduce margin.