Margin Calculator
Enter any two of cost, price and margin to get the rest — including markup percentage and gross profit per unit.
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Gross margin
60%
$27.00 profit per unit.
Margin is profit over the selling price; markup is profit over the cost. They are never the same number.
Margin and markup are different numbers
This is the single most common pricing mistake, and it costs real money.
- Margin — profit as a share of the selling price.
(price − cost) ÷ price - Markup — profit as a share of the cost.
(price − cost) ÷ cost
A product costing 50 and selling for 75 carries a 50% markup and a 33.3% margin. Someone who applies a 40% markup believing they've secured a 40% margin has underpriced by a meaningful amount.
| Markup | Margin |
|---|---|
| 25% | 20.0% |
| 50% | 33.3% |
| 100% | 50.0% |
| 200% | 66.7% |
Pricing from a target margin
Working backwards is usually more useful than working forwards. To hit a target margin, divide the cost by one minus the margin:
price = cost ÷ (1 − margin)
A 20 unit cost at a 60% target margin needs a price of 20 ÷ 0.4 = 50. This is the mode to use when the margin is the business constraint and the price is the output.
Gross margin isn't profit
Gross margin covers direct unit costs only — materials, manufacturing, shipping, payment processing. Everything else comes out of what's left: rent, salaries, software, marketing, tax. A healthy gross margin and an unprofitable business are entirely compatible.
What counts as a variable cost
Include anything that scales with each additional sale:
- Materials and manufacturing
- Packaging and shipping
- Payment processing fees, typically 2–3%
- Marketplace commission
- Expected returns and breakage
Leaving out payment fees and returns is the usual reason a margin looks better on a spreadsheet than in the bank account.
How to use the Margin Calculator
Three steps, no sign-up.
Enter your unit cost
Everything it costs you to deliver one unit.
Enter a price or a target margin
Give it either one and it solves for the other, so you can price backwards from a margin goal.
Check markup as well as margin
They're different numbers and mixing them up is the most common pricing mistake.