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Input revenue and costs to instantly calculate gross profit margin, gross profit amount, and cost ratio, helping you determine if your product and business are profitable.
Enter selling price and cost to calculate gross margin and gross profit.
Overview
Understand what the tool solves, how it works, and the boundaries of its data.
Gross profit is the amount left after subtracting the cost assigned to the goods or services represented by the sale. Gross margin expresses that amount as a share of the selling price: gross profit = selling price − cost, then gross margin (%) = gross profit ÷ selling price × 100. The selling price is the denominator. A margin of 33.33% means about 33 cents of each dollar of selling price remains after the entered cost, before any other expenses included in your business reporting.
The calculator works with compatible price and cost figures that you provide. You can calculate a margin from a known pair, estimate the selling price needed for a target margin, or estimate the cost limit for a target margin and selling price. It performs arithmetic; it does not decide which accounting items belong in revenue or cost.
Markup compares gross profit with cost: markup (%) = gross profit ÷ cost × 100. Margin compares the same profit with selling price. For a $120 selling price and $80 cost, profit is $40, margin is 33.33%, and markup is 50%. The amounts are identical; only the denominator changes. Do not label one percentage as the other when comparing a price plan or communicating results.
The result panel reports gross margin, selling price, cost, gross profit, and markup rate. Markup is shown as not applicable when cost is zero because division by zero is undefined. The displayed amounts and rates are rounded to two decimal places; calculations use the entered numeric values.
Guide
Follow the workflow and verify inputs and outputs with practical examples.
Gross Margin: enter a selling price greater than zero and a nonnegative cost. The result includes gross profit and both margin and markup percentages.
Selling Price: enter the cost and a target gross margin percentage. For example, enter 50 for 50%, not 0.50. The target must be below 100% for this calculation to produce a finite selling price.
Cost: enter the selling price and target margin percentage to calculate the corresponding cost. Keep a target below 100% when you need a positive cost.
Read the named fields in the result panel. Use one currency and a consistent basis for both amounts, such as per item with per-item cost or a period total with the matching cost for that period. The dollar sign beside the inputs is a label; the calculator does not convert currencies.
Example: with a selling price of $120 and cost of $80, gross profit is $40; $40 ÷ $120 × 100 = 33.33% margin, while $40 ÷ $80 × 100 = 50.00% markup. If cost is $80 and the target margin is 50%, the required selling price is $80 ÷ (1 − 0.50) = $160.
Use cases
See how the tool fits into real work and everyday tasks.
A shop owner can enter the selling price and cost for one item to see the gross profit amount and the margin on that price. Comparing several products is easiest when each pair uses the same currency and the same definition of cost.
A seller planning a 40% gross margin on an item costing $60 can use Selling Price mode: $60 ÷ (1 − 0.40) = $100. The result is the price implied by those two assumptions; it does not account for other expenses or tell the seller whether that price fits the market.
For a period-level check, use sales and corresponding cost for the same period and scope. Do not compare a monthly sales total with a per-unit cost, or treat the margin percentage alone as the amount of cash available.
Q&A
Find concise answers to common questions and confusing cases.
They divide the same gross profit by different amounts. Markup uses cost as its base, while gross margin uses selling price. With $40 profit, $80 cost, and $120 selling price, markup is 50% and margin is 33.33%.
Enter 35. The target field is a percentage entry, and the calculation converts it to a fraction internally.
Markup divides gross profit by cost. A zero cost would require division by zero, so no finite markup percentage can be calculated; the other result fields can still be meaningful for the entered values.
No. It reflects only the entered selling price and cost. Expenses such as rent, payroll, marketing, interest, and taxes are not added automatically, so this figure alone cannot establish operating or net profit.
Notes
Review scope, result limitations, and important precautions before use.
Gross profit depends on the definitions and scope used for both sides of the calculation. For U.S. federal Schedule C, IRS Publication 334 describes gross profit in relation to net receipts and cost of goods sold, with business expenses deducted afterward; inventory and other tax rules may affect how those amounts are determined. That tax guidance applies to its stated audience and should not be taken as a universal management-accounting rule.
This calculator accepts a single price, cost, and target percentage at a time. It does not determine whether returns, discounts, shipping, labor, inventory changes, sales tax, platform charges, or other items belong in your figures. Use a consistent currency, period, unit basis, and tax treatment, and apply the accounting method relevant to your purpose. The result is a simplified arithmetic estimate, not a financial statement, tax calculation, accounting determination, or investment recommendation.
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