Profit Margin, Markup & Cost-Volume-Profit Calculator

Corporate Finance: Margin vs. Markup Explained

The terms margin and markup are frequently confused by business owners, but they measure profitability from opposite perspectives:

• Profit Margin is profit expressed as a percentage of the Selling Price / Revenue). Margin can never exceed 100%.

• Cost Markup is profit expressed as a percentage of the Product Cost). Markup can exceed 100%, 200%, or 500%+.

How to Use This Calculator

Enter your Total Revenue / Selling Price () (e.g. 250000), Cost of Goods Sold (COGS - Direct Material & Labor in ) (e.g. 110000), Operating Expenses (OpEx / SG&A Overhead in ) (e.g. 65000), and Interest & Income Taxes () (e.g. 18000 (or 0)). Results update instantly as you type — adjust any value to compare scenarios.

The Formula

Corporate profitability & margin vs. markup formulas: Profit = Revenue - Cost of Goods Sold (COGS) Margin (\%) = ((Gross Profit) / (Revenue)) × 100\% Markup (\%) = ((Gross Profit) / (COGS)) × 100\% = (Margin) / (1 - Margin) Profit (EBIT) = Gross Profit - Operating Expenses (OpEx) Margin (\%) = ((Operating Income) / (Revenue)) × 100\% Profit Margin (\%) = ((Net Income) / (Revenue)) × 100\%

Worked Example

For example, a company with 250,000 in revenue, 110,000 in COGS, 65,000 in OpEx, and 18,000 in taxes/interest: Gross Profit is . Operating Profit (EBIT) is . Net Profit is .

Understanding Your Result

Gross margin and markup are different: 50% markup = 33% gross margin. Pricing strategy varies by industry: SaaS software targets 70–85% gross margins; e-commerce typically 30–50%; professional services 50–70%; retail 25–50%; restaurants 60–75% (gross food cost margin). A gross margin below your industry average signals pricing pressure or high COGS — investigate before scaling. Contribution margin (revenue minus variable costs only) is the more useful metric for short-term pricing and production decisions.