How to Calculate Profit, Loss, Margin, and Markup
Profit and loss calculations are fundamental to any business. Understanding the difference between gross margin and markup is particularly important — they are related but represent different perspectives on the same transaction. Gross margin measures profit as a percentage of the selling price, while markup measures profit as a percentage of the cost.
Google ad
Formula
Profit & Loss Calculator
Calculate profit or loss, gross margin, and markup from cost and revenue.
Google ad
Worked Example
Given:
Related Calculators
FAQs
What is the difference between gross margin and markup?
Gross margin is profit divided by revenue (selling price). Markup is profit divided by cost. For the same transaction, markup is always higher than gross margin. A 50% markup equals a 33.3% gross margin. Confusing these two is a common and costly business mistake.
What is a healthy gross margin?
Healthy margins vary widely by industry. Retail typically achieves 20–50% gross margin. Software companies often achieve 70–80%+. Grocery stores operate on margins as low as 1–3%. Compare your margin to industry benchmarks rather than a universal standard.
How do I set a selling price to achieve a target margin?
To achieve a target gross margin of X%, set price = Cost ÷ (1 - X/100). For example, to achieve a 40% margin on a $30 cost item: price = $30 ÷ 0.60 = $50. To achieve a 40% markup instead: price = $30 × 1.40 = $42.