Profit margin & markup
Keep margin and markup separate when pricing a product.
How this works
Gross margin = (price − cost) ÷ price × 100. Markup = (price − cost) ÷ cost × 100.
Example
Using the example inputs, gross profit margin is 40%.
- Selling price
- 100 USD
- Cost
- 60 USD
- Gross profit margin
- 40%
Negative results indicate selling below the entered cost. Include relevant costs yourself; this is not net profit.
Scope and assumptions
Excludes tax, overhead, refunds, shipping and platform fees unless included in your cost input. No live fee schedules.
U.S. Small Business Administration: manage finances