Understanding your result
Margin uses revenue as the denominator. Markup uses cost. A loss produces negative profit and margin; markup is undefined when cost is zero.
To evaluate profit against a total investment cost rather than sales revenue, use the ROI Calculator and include the relevant costs in its cost basis.
The formula
Profit is revenue minus cost. Cost share and margin add to 100% when both use the same cost definition and revenue is positive.
Worked example
Selling for 150 with a cost of 100 creates 50 profit. Margin is 50 ÷ 150 = 33.33%, while markup is 50 ÷ 100 = 50%.
How to use this calculator
- Enter revenue or selling price for the product or period being measured.
- Enter the matching cost in the same currency, including the expenses relevant to the margin you want to measure.
- Compare profit margin with markup on cost; they use different denominators and are not interchangeable.
Margin is not markup
A 50% markup on 100 creates a 150 selling price and 33.33% margin. Applying the wrong percentage can miss a target.
State whether cost includes only goods or also labor, overhead, fees, and returns.
Use consistent accounting periods
Comparing monthly revenue with annual cost produces a meaningless margin. Align the same product scope, currency, and time period.
Gross, operating, and net margins use different cost definitions. This calculator uses only the cost entered.
Assumptions & limitations
What this calculation assumes
- Revenue is positive.
- Cost and revenue cover the same scope and period.
- No separate tax treatment.
What to keep in mind
- It does not define gross, operating, or net cost for you.
- Zero cost makes markup undefined.
- Forecasts depend on accurate volume and cost data.
Common questions
Why are margin and markup different?
They divide the same profit by different bases.
Can margin be negative?
Yes, when cost exceeds revenue.
Can margin exceed 100%?
With nonnegative cost and positive revenue, it cannot exceed 100%.