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Retail Margin Calculator

Enter the item cost and retail price to see margin, profit and markup.

How it is calculated

profit = price − cost, gross margin = profit / price × 100 and markup = profit / cost × 100. Cost is what you paid per item and price is the selling price, both in dollars before sales tax. Margin is measured against the selling price, markup against the cost, so for any profitable item the markup percentage is the higher of the two.

Price must be above zero and cost cannot be negative. If the price is below cost, the profit and margin come out negative. With a cost of 0 the markup is displayed as 0.00%, though mathematically it is undefined. Results are rounded to two decimals. The figures are gross: they leave out shipping, fees, returns and overhead.

Worked example

An item costs 60 and sells for 90. Profit = 90 − 60 = $30.00. Gross margin = 30 / 90 × 100 = 33.33%. Markup = 30 / 60 × 100 = 50.00%. The same profit gives two different percentages because the denominators differ: to reach a 33.33% margin you must mark the cost up by 50%.

Try this example →

Common mistakes

  • Treating a 50% markup as a 50% margin: a 50% markup gives only a 33.33% margin, so pricing for margin with the markup formula leaves you short.
  • Entering the price including VAT or sales tax: the tax is not yours, so margin on a tax-inclusive price is overstated.
  • Entering the cost per case or pack while the price is per item: both must be for the same unit.
  • Reading gross margin as take-home profit: shipping, payment fees, returns and rent are not subtracted.

Sources

About this calculator

This calculator works from two numbers — item cost and selling price — to produce the three figures retailers actually price around: gross profit (price − cost), gross margin (profit ÷ price, expressed as a percentage of the selling price), and markup (profit ÷ cost, expressed as a percentage of what you paid). Margin and markup are easy to confuse but always differ — a 50% markup is only a 33% margin — which is exactly why seeing both side by side matters.

Retail store owners and e-commerce merchandisers use it when setting shelf or listing prices to hit a target margin, and pricing analysts use it to audit whether current prices across a catalog are actually delivering the margin the business plan assumes.

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