Margin calculator
Gross margin as (revenue - cost) / revenue x 100. Example: cost 700,000 and price 1,000,000 give a 30% margin and 300,000 gross profit.
Formula estimate only. Rates, taxes, and legal rules vary by jurisdiction.
What to know
The margin page takes a Cost and a Sale or final value, which it treats as revenue, and returns the gross margin rate. The formula is margin = (revenue - cost) / revenue x 100, with gross profit (revenue minus cost) and revenue listed under it.
Worked example: cost 700,000 and revenue 1,000,000 give 300,000 / 1,000,000 x 100 = 30 percent. Cost 450 and price 600 give 150 / 600 x 100 = 25 percent. A price below cost shows a negative margin.
The divisor is revenue, not cost, so this is margin rather than markup. A 30 percent margin equals a 42.86 percent markup on cost, and a 50 percent markup equals only a 33.3 percent margin. Quoting the wrong one is a classic pricing error.
Revenue must be greater than zero, and the result is a gross figure before overheads, shipping, taxes and discounts. Fold any of those into the cost field if you want a net view of one product.
Retail categories show how different margins can look. A grocery item with 450 cost and 500 price has a 10 percent margin, while a software licence with 100 cost and 1,000 price has a 90 percent margin, though both earn the seller a positive profit.
Choose a specific task 4
Related tools 3
How to use Margin calculator
- Enter Cost 700,000.
- Enter Sale or final value 1,000,000.
- Read the Margin rate line, which shows 30%.
- Check the Gross profit line, which shows 300,000.
Quick answers
What is the margin on a product bought for 450 and sold for 600?
25 percent, because (600 - 450) / 600 = 0.25.
How is margin different from markup?
Margin divides profit by price and markup divides profit by cost. 150 profit on a cost of 450 is a 33.3 percent markup but a 25 percent margin.
Can the margin exceed 100 percent?
No. Because cost cannot be negative, margin tops out at 100 percent when the cost is zero.