Margin Calculator

Margin = Profit / Revenue x 100 (percentage of selling price). Markup = Profit / Cost x 100 (percentage of cost). Example: Cost $50, sell $100 - Profit = $50, Margin = 50%, Markup = 100%. Margin is ALWAYS lower than markup. Retailers often confuse these - 50% margin ≠ 50% markup. Use margin for profitability analysis, markup for pricing strategy.

Varies by industry: Grocery stores 1-3%, restaurants 3-5%, retail 5-10%, software/SaaS 70-90%, consulting 10-20%, manufacturing 5-15%. Net margin (after all expenses): 10%+ is healthy for most businesses, 20%+ is excellent. Gross margin (before operating expenses): 50%+ allows room for costs. Low-margin businesses need high volume; high-margin can succeed with fewer sales.

Selling Price = Cost / (1 - Desired Margin as decimal). Want 40% margin on $60 cost: Price = $60 / (1 - 0.40) = $60 / 0.60 = $100. Check: ($100 - $60) / $100 = 40% margin. Common mistake: $60 x 1.40 = $84 gives 28.5% margin, not 40%. Use division, not multiplication.

Different denominators: Markup divides by cost (smaller number), margin divides by revenue (larger number). 100% markup = 50% margin because profit is same, but you're measuring against different bases. Businesses price using markup (easier), but measure profitability using margin (shows what percentage of each sale is profit). Both are correct, just different perspectives.