What this result means
The headline result is gross margin percentage, which shows gross profit as a share of selling price.
How the Profit Margin & Markup Calculator works
Gross margin uses selling price as the denominator; markup uses cost. They are not the same.
The calculator does not fetch live prices or rates. That is intentional: you provide the tariff, price, rate or cost that actually applies to your situation, which makes the assumptions visible and avoids presenting stale market data as current.
How to get a more useful estimate
- Do not confuse markup with margin; a 50% markup is not a 50% margin.
- Use fully loaded direct cost if you want the margin to reflect all variable production costs.
- Track margin after discounts because actual selling price may be lower than list price.
Scenario check
Use both percentages when discussing pricing because they answer different questions. Margin describes gross profit as a share of selling price, while markup describes gross profit relative to cost. When a price changes, recalculate both rather than mentally converting between them; small denominator differences can create surprisingly large percentage differences.
Important limitations
- Overhead, tax, financing, and operating expenses are not included in gross margin.
- The calculator uses one cost and one selling price.
- Negative margins are possible if selling price is below cost.
Frequently asked questions
What is the difference between markup and margin?
Margin divides gross profit by selling price; markup divides gross profit by cost.
Can gross margin exceed 100%?
Not with a positive selling price and non-negative cost. If your inputs imply that, recheck them.
Is gross margin the same as net profit margin?
No. Net profit margin also accounts for operating expenses, financing, taxes, and other costs.