Margin is profit relative to revenue; markup is profit relative to cost.
📐 Step-by-Step Calculation Breakdown
Substituted values from your current calculation inputs:
Cost: ₹40
Selling Price (Revenue): ₹60
How to Use This Calculator
Enter cost and selling price, or choose to solve from margin % or markup %.
Click Calculate.
Example Calculation
Cost 40, sell 60: margin = 33.33%, markup = 50%.
Understanding the Results
Margin and markup look similar but differ. A 50% markup equals only a 33.3% margin.
Margin Calculator — Gross Profit Margin vs. Markup % on Cost
One of the most frequent financial errors in retail and wholesale enterprise is conflating gross margin with markup. While both express profitability, they use completely different denominators. The Margin Calculator solves for revenue, cost, gross profit, margin percentage, and markup percentage simultaneously.
1. Why Margin and Markup Are NOT the Same
• Gross Margin: The percentage of total revenue (sales price) that remains after covering Cost of Goods Sold (COGS). • Markup: The percentage added to cost price to arrive at the selling price.
The Golden Rule: Markup will ALWAYS be higher than gross margin for any profitable transaction. A 50% markup on cost produces only a 33.3% gross margin on revenue!
Scenario: You manufacture a product for ₹600. Your business requires a 40% gross margin to cover overhead, sales commissions, and profit.
Common Mistake: Adding 40% to ₹600 = ₹600 + ₹240 = ₹840 selling price. At ₹840, your profit is ₹240, which is only ₹240 ÷ ₹840 = 28.6% margin! You missed your target by 11.4%.
Financial Disclaimer: Financial Disclaimer: Calculation results and projections are provided for educational and illustrative purposes only and do not constitute financial, investment, lending, or tax advice. Actual borrowing terms, interest rates, and loan charges are determined by lenders and underwriting policies.
Frequently Asked Questions
What is a good profit margin?
It varies by industry. Retail typically 2-10%, software 70-80%, restaurants 3-9%. Compare to industry peers.
💼Salary, Taxes & Business Finance Cluster
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