Margin formula
Profit = sell price − cost. Margin % = (profit ÷ sell price) × 100. If you buy for $40 and sell for $100, profit is $60 and margin is 60%.
Markup formula
Markup % = (profit ÷ cost) × 100. Same example: $60 ÷ $40 = 150% markup. Saying “150% margin” when you mean markup is a common mix-up.
Why the distinction matters
Pricing, reporting, and negotiations use different bases. A 50% margin means half the sale is profit; a 50% markup means you added half the cost on top. Use our margin calculator to see both at once.
Gross vs net
Gross margin uses revenue minus cost of goods. Net margin subtracts operating expenses, interest, and taxes. This tool focuses on the simple cost-vs-sell case used for product pricing.