Profit Margin Calculator: Markup vs Margin
Calculate gross profit margin, net margin, and markup percentage for any product or business.
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Profit Margin Calculator: Markup vs Margin Margin and markup both measure profit, but they use different denominators — confusing them costs businesses money. A product with ₹400 cost and ₹1,000 selling price has a 60% margin (profit ÷ revenue) but 150% markup (profit ÷ cost). Using markup numbers in a margin-based pricing model creates systematic underpricing. --- See our Complete Guide to Financial Calculators What's the difference between margin vs markup: the core formulas? Gross Profit Margin: Markup: Conversion formulas: Comparison table: | Cost | Selling Price | Profit | Margin | Markup | |---|---|---|---|---| | ₹100 | ₹125 | ₹25 | 20% | 25% | | ₹100 | ₹150 | ₹50 | 33.3% | 50% | | ₹100 | ₹200 | ₹100 | 50% | 100% | | ₹100 | ₹300 | ₹200 | 66.7% | 200% | | ₹600 | ₹1,000 | ₹400 | 40% |…
Frequently Asked Questions
What is profit margin?
Profit margin is the percentage of revenue remaining after subtracting costs. Gross margin excludes only cost of goods sold (COGS). Net margin subtracts all expenses including operating costs, taxes, and interest. A 30% gross margin means ₹30 of every ₹100 in revenue covers COGS and contributes to profit.
What is the difference between markup and margin?
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. For an item costing ₹600 and selling for ₹1,000: margin = (1000 - 600) / 1000 = 40%; markup = (1000 - 600) / 600 = 66.7%. Same profit (₹400), different denominators — using them interchangeably is a common and costly business error.
How do I calculate gross profit margin?
Gross profit margin = ((Revenue - COGS) / Revenue) × 100. If you sell a product for ₹500 and it costs ₹300 to produce: gross profit = ₹200. Gross margin = (200 / 500) × 100 = 40%. This measures how efficiently you produce or source your product.
What is a good profit margin?
Good margins vary dramatically by industry. Software/SaaS: 70–80% gross margin. Retail: 30–50% gross margin. Restaurants: 3–9% net margin. Manufacturing: 20–35% gross margin. eCommerce: 10–40% gross margin depending on category. Compare against your industry benchmark, not a universal number.
How do I improve profit margins?
Four levers: (1) raise prices if demand is inelastic, (2) reduce COGS through better supplier negotiation or process efficiency, (3) reduce operating expenses, (4) shift product mix toward higher-margin items. A 5% price increase on a 30% margin product increases profit by 16.7% with no volume change.
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