Calculate gross margin percentages, markups on cost, and required selling prices. Easily toggle between cost and revenue baselines with zero-division guards and clean decimal accuracy.
Your acquisition, manufacturing, or wholesale purchase price per unit.
The final price charged to your customer or client.
Applied Formula Breakdown:
Profit = £80.00 - £50.00 = £30.00
Margin = (£30.00 ÷ £80.00) × 100 = 37.50%
Markup = (£30.00 ÷ £50.00) × 100 = 60.00%
Key rule: Margin is calculated as a fraction of the selling price, whereas markup is calculated as an addition on top of the cost basis.
Although margin and markup use the exact same currency profit figure, they express that profit against different baselines:
Gross Margin % = ((Selling Price - Cost) / Selling Price) × 100
Gross margin answers: “Out of every £100 I collect from the customer, how much is left after paying for the item?” Margin can never reach or exceed 100% unless costs are zero or negative.
Markup % = ((Selling Price - Cost) / Cost) × 100
Markup answers: “How much extra percentage did I add on top of what I paid for the goods?” Markup can easily exceed 100% (e.g. buying for £10 and selling for £30 is a 200% markup).
Use this conversion chart to quickly find the exact markup needed to produce your desired profit margin:
| Cost Markup % | Price Multiplier | Equivalent Gross Margin % | Example (£50 Cost) |
|---|---|---|---|
| 10.0% | 1.10x | 9.1% | £55.00 |
| 20.0% | 1.20x | 16.7% | £60.00 |
| 25.0% | 1.25x | 20.0% | £62.50 |
| 33.3% | 1.33x | 25.0% | £66.67 |
| 50.0% | 1.50x | 33.3% | £75.00 |
| 100.0% | 2.00x | 50.0% | £100.00 |
Learn the legal rules, mathematical formulas, and practical best practices behind these calculations.
Confusing profit margin with markup is one of the most common reasons businesses fail to reach their profitability goals. This guide clarifies the mathematics, provides a handy conversion table, and shows you how to price services accurately.
Margin is profit expressed as a percentage of selling price (Revenue - Cost) / Revenue. Markup is profit expressed as a percentage of original cost (Revenue - Cost) / Cost.
Healthy margins vary widely by industry. Service businesses often target 50-70% gross margins, whereas retail and wholesale typically operate between 20% and 40%.
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