Business ToolCommercial Pricing

Gross & Net Profit Margin Calculator

Determine gross profit margins, net margins, and required markup multipliers to price your products and services profitably.

Financial Revenue InputsUSD

$
$
$
Gross Profit Margin
40.00%
Gross Profit: $40.00 per unit
Markup Percentage
66.67%
Net Profit Margin
25.00%
Net Profit ($)
$25.00

Margin vs. Markup Explained

Profit Margin (40.0%): The percentage of selling price that turns into profit. Formula: (Profit ÷ Revenue) × 100.

Markup (66.7%): The percentage added on top of your original unit cost. Formula: (Profit ÷ Cost) × 100.

Profit Margin Formulas

1. Gross Margin Formula:
Gross Margin (%) = [ (Revenue − COGS) / Revenue ] × 100
2. Markup Formula:
Markup (%) = [ (Revenue − COGS) / COGS ] × 100
3. Pricing for a Target Margin:
Selling Price = COGS / (1 − Target Margin / 100)

Frequently Asked Questions

What is the difference between margin and markup?

Margin is profit expressed as a percentage of the selling price: (Profit ÷ Revenue) × 100. Markup is profit expressed as a percentage of the cost of goods: (Profit ÷ Cost) × 100. For example, if an item costs $60 and sells for $100, the profit is $40: the margin is 40% ($40 ÷ $100), but the markup is 66.67% ($40 ÷ $60).

What is gross margin vs net margin?

Gross margin only deducts direct product costs (Cost of Goods Sold/COGS) from revenue. Net margin deducts ALL operating costs, including marketing, overhead, rent, administrative salaries, and income taxes, representing actual bottom-line profitability.

How do you calculate selling price from cost and desired margin?

To price a product for a desired gross margin percentage, divide the cost by (1 − Margin ÷ 100). For example, if cost is $80 and desired margin is 20%: Selling Price = $80 ÷ (1 − 0.20) = $80 ÷ 0.80 = $100.

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