What Is a Margin Calculator?
A margin calculator finds your profit margin (profit as a percentage of revenue) from cost and sale price, or works in reverse to find the sale price needed to hit a target margin — a key metric distinct from markup, which is often confused with margin.
How to Use the Margin Calculator
- Choose whether to find margin or find the required sale price.
- Enter cost and either revenue or your target margin.
Margin Formula
Worked Example
Gross profit: $60 − $40 = $20
Margin: $20 / $60 = 33.3%
Markup: $20 / $40 = 50%
Margin vs. Markup: The Key Difference
Margin is profit as a percentage of the sale price (revenue). Markup is profit as a percentage of the cost. These are frequently confused but give different numbers for the same sale — a 50% markup is not the same as a 50% margin.
Common Mistakes to Avoid
- Confusing margin (based on revenue) with markup (based on cost) — this is the single most common pricing mistake.
- Not accounting for all costs (not just direct product cost) when calculating true margin.
Frequently Asked Questions
Margin is profit divided by revenue (sale price); markup is profit divided by cost. They use different denominators, so the same profit produces different percentages for each.
Subtract cost from revenue to get profit, then divide by revenue and multiply by 100.
This varies enormously by industry — retail, software, and services all have very different typical margins, so compare against industry benchmarks rather than a universal target.
Divide the cost by (1 minus the target margin as a decimal): Sale Price = Cost / (1 − Margin%).
No — a 50% markup on a $40 cost gives a $60 sale price, which is only a 33.3% margin, illustrating why these two metrics shouldn't be used interchangeably.