Gross Margin Calculator
Enter a selling price and the cost of goods sold to find your gross margin — and the equivalent markup, side by side.
On £100.00 of revenue with £60.00 of cost, the profit is £40.00. That's a gross margin of 40.00% — and an equivalent markup of 66.67%.
Results update as you type.
Formula
Gross margin is profit as a percentage of revenue:
margin% = (revenue − cost) / revenue × 100.
The same gap expressed as markup divides by cost instead:
markup% = (revenue − cost) / cost × 100.
For a profitable product, markup is always the larger of the two — they only equal at zero.
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Frequently asked questions
What's the difference between margin and markup?▾
Both measure the gap between revenue and cost — but they divide by different things. Margin is profit as a percentage of revenue (the selling price); markup is profit as a percentage of cost. So a £40 profit on a £100 sale that cost £60 is a 40% margin and a ~67% markup. Same gap, two perspectives. Retailers usually price by markup; finance teams usually report by margin. Confusing the two will under-price you (using a markup figure as if it were margin).
Is this gross margin or net margin?▾
Gross. Gross margin = (revenue − COGS) / revenue. It only deducts the direct cost of producing or sourcing what you sold (raw materials, manufacturing labour, wholesale price). Net margin deducts everything else too — overheads, salaries, rent, marketing, tax — and is typically much smaller. A 40% gross margin might be a 5–15% net margin once everything else is paid.
What's a 'good' gross margin?▾
It depends entirely on the industry. Software-as-a-service: 70–85%. Restaurants on food: 60–70% (much less on labour-heavy items). Grocery retail: 20–30%. Wholesale distribution: 10–20%. Manufacturing: 25–40%. Compare yours to the industry average — not to a generic target.
Does this account for VAT?▾
No — enter your figures net of VAT. If you're VAT-registered in the UK, the 20% you charge customers passes straight to HMRC, so it's not part of your revenue or your margin. If you're not VAT-registered, you can use VAT-inclusive figures, but be consistent: don't mix net cost with gross revenue.
How do I work out the price for a target margin?▾
If your cost is fixed and you want a target margin %, the formula is: price = cost / (1 − margin%/100). For 30% margin on a £70 cost: 70 / 0.70 = £100 selling price. The Markup Calculator does this in the opposite direction (target markup → price), but the maths is the same number from a different angle.