Enter your revenue and cost of goods to instantly calculate gross profit, profit margin percentage and markup percentage.
Profit margin is profit expressed as a percentage of revenue. If you sell something for £100 and it cost you £60, your profit margin is 40%. It tells you how much of every pound of revenue is actual profit.
Markup is profit expressed as a percentage of cost. Using the same example, £40 profit on £60 cost is a 66.7% markup. Retailers often set prices by marking up their costs — but check the resulting margin to make sure it's actually healthy.
Mixing up margin and markup is one of the most common pricing errors. A 50% markup sounds strong but only gives you a 33% margin. Use this tool to check both numbers whenever you set a price.
It depends on the industry. Physical product retail typically aims for 30–50% gross margin. Digital products (courses, templates, ebooks) can achieve 80–90%+ because there's no unit cost per sale. SaaS businesses typically target 70%+ gross margins.
Gross profit margin only deducts the direct cost of the product (COGS). Net profit margin deducts all expenses — rent, salaries, marketing, platform fees, taxes. Gross margin is always higher. Use gross margin for product-level decisions and net margin for overall business health.
Either raise your price or lower your costs. Raising prices is often more effective — a 10% price increase on a 40% margin product improves margin to 49%, a much bigger gain than a 10% cost reduction which only moves it to 44%. Price increases require strong positioning and perceived value.
Set your target margin first (e.g. 50%), then calculate the required selling price: Price = Cost ÷ (1 − Margin). Working backwards from a markup can lead to pricing that looks profitable but isn't, because markup % is always a higher number than the equivalent margin %.