Profit margin
37.5%
$30.00 profit on each $80.00 sale
Gross profit per unit
$30.00
Margin
37.5%
Markup
60%
- Cost
- $50.00
- Gross profit
- $30.00
- Selling price
- $80.00
Totals for 100 units
- Revenue (selling price × units)
- $8,000.00
- Total cost
- $5,000.00
- Total gross profit
- $3,000.00
Margin vs. markup
Both describe the same $30.00 of profit. Margin measures it against the selling price: $30.00 ÷ $80.00 = 37.5%. Markup measures it against the cost: $30.00 ÷ $50.00 = 60%. Check: margin = markup ÷ (1 + markup) = 0.6 ÷ 1.6 = 37.5%.
Price for common margins on a $50.00 cost
| Margin | Selling price | Gross profit | Markup |
|---|---|---|---|
| 20% | $62.50 | $12.50 | 25% |
| 30% | $71.43 | $21.43 | 42.86% |
| 40% | $83.33 | $33.33 | 66.67% |
| 50% | $100.00 | $50.00 | 100% |
| 60% | $125.00 | $75.00 | 150% |
This is gross margin: it counts only what the item costs you, not overhead, labor, shipping, payment fees or taxes. Leave sales tax out of the selling price. Amounts are rounded to the cent for display; percentages use the unrounded figures.