Margin Calculator

Understanding Profit Margin, Markup, and Profit

For any business to succeed, understanding financial performance metrics is critical. This calculator helps you determine the relationship between cost, revenue, profit margin, markup, and net profit. By inputting any two of these values, you can instantly compute the remaining variables and analyze your pricing strategy.

Profit Margin vs. Markup

Though often used interchangeably, profit margin and markup represent different financial calculations:

• Profit Margin: The ratio of profit to the sales price. It indicates what percentage of your revenue is kept as profit.
• Markup: The ratio of profit to the cost price. It represents the percentage by which the cost is increased to arrive at the selling price.

Key Formulas

The calculations are based on the following standard financial formulas:

• $$\text{Gross Profit} = \text{Revenue} - \text{Cost}$$
• $$\text{Profit Margin} = \left( \frac{\text{Revenue} - \text{Cost}}{\text{Revenue}} \right) \times 100$$
• $$\text{Markup} = \left( \frac{\text{Revenue} - \text{Cost}}{\text{Cost}} \right) \times 100$$