Profit Margin & Markup Calculator
See what you keep from each sale before overheads. Compare margin with markup, or work backwards from the margin you want to a selling price.
An example is loaded. Replace it with your figures. All amounts are AUD.
- Selling price
- $100.00
- Gross profit per sale
- $40.00
- Gross margin
- 40%
- Markup on cost
- 66.67%
Margin = (price − cost) ÷ price × 100. Markup = (price − cost) ÷ cost × 100.
Gross profit still has to cover overheads and tax. Use consistent GST-exclusive amounts if you can claim the relevant GST credits.
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Margin and markup use different bases
For a product costing $60 and selling for $100, gross profit is $40. Margin is $40 ÷ $100 = 40%. Markup is $40 ÷ $60 = 66.67%. Both describe the same sale, but they are not interchangeable.
Adding a 40% markup to $60 gives an $84 price and a 28.57% margin. To achieve a 40% margin, divide $60 by 0.60, giving $100. Use the target-margin mode to avoid this common pricing error.
Gross profit is not money available to spend
The gross profit shown only subtracts the cost you enter. It still needs to fund rent, administration, marketing and any other overheads excluded from that cost. Income tax is not calculated here.
Use a consistent definition of cost. A retailer might include product cost, inbound freight and packaging; a service business might include job-specific labour and materials. Do not compare two offers using different cost definitions.
Test discounts before you advertise them
On the $60-cost, $100-price example, a 10% discount cuts the price to $90 and gross profit to $30. You would need one-third more sales to generate the previous total gross profit, assuming unit costs stay unchanged.
Change the selling price to explore a promotion, then use the break-even calculator to check the volume required. If cost exceeds price, the result clearly shows a loss. Markup is undefined when cost is zero, so the tool does not invent a percentage.
Common questions
What price gives me a 30% margin on a $70 cost?
$70 ÷ (1 − 0.30) = $100. Gross profit is $30, a 30% margin and a 42.86% markup.
Should I include GST?
Keep the basis consistent. If you are GST registered and can claim the relevant credits, use GST-exclusive sales and costs. Include GST you cannot recover in your cost.
Put the result to work
Sources and assumptions
Formula notes checked 5 September 2026. Examples are illustrative; these tools provide general information.