What is the difference between margin and markup?

Margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. A 50% markup = 33.3% margin. Retailers in the US typically use markup; accountants and analysts use margin. UK/EU finance reporting usually expresses profitability as gross margin.

What is a good gross margin?

Gross margin benchmarks vary widely by industry: Software/SaaS: 70–85%. Retail: 25–50%. Manufacturing: 30–60%. Food & Beverage: 30–40%. Auto dealers: 10–15%. Service businesses: 50–70%. A gross margin above your industry average indicates strong pricing power.

How is gross margin different from net margin?

Gross margin = (Revenue − COGS) / Revenue. Net margin = Net profit after ALL expenses (including OPEX, interest, tax) / Revenue. A business can have a high gross margin but low net margin if overhead costs are high. Amazon, for example, runs ~48% gross margin but much lower net margins due to R&D and logistics spend.

📊 Gross Margin 🏷️ Markup % 💰 Profit

Gross Margin Calculator

Calculate gross margin, markup, and profit from cost and revenue. Margin and markup are not the same — a 50% markup gives a 33.3% margin.

Quick Answer

Gross Margin = (Revenue − Cost) ÷ Revenue. Markup = (Revenue − Cost) ÷ Cost. Example: Cost $100, Price $150 → Gross Margin = 33.3%, Markup = 50%. These terms are often confused — retailers use markup; financial analysts use margin.

Cost ($)

Revenue / Selling Price ($)

Margin vs Markup — Conversion Table

Markup %	Gross Margin %	Typical Industry
11.1%	10%	Grocery / supermarkets
25%	20%	Auto dealers, hardware
50%	33.3%	Electronics retail, apparel
100%	50%	Restaurants, luxury goods
200%	66.7%	Cosmetics, pharmaceuticals
400%	80%	Software, SaaS products

Frequently Asked Questions

Why do retailers use markup instead of margin?▾

Retailers traditionally price products by applying a standard markup to their cost (e.g., keystone pricing = 100% markup = 2× cost). This is simpler for buyers and merchandisers who think in terms of "how much did we pay?" rather than "how much did we sell it for?" Financial analysts and CFOs always evaluate performance using margin because it measures profitability relative to revenue.

What does a negative gross margin mean?▾

A negative gross margin means you are selling products below cost. This is sometimes deliberate (loss leaders to attract customers) but unsustainable long-term. In the UK and EU, below-cost selling of certain goods (e.g., alcohol) is regulated or banned.