About this calculator
Margin and markup are two ways to express the same profit relationship, but they’re measured against different denominators — and confusing them is one of the most common pricing mistakes. Margin is profit as a percentage of revenue. Markup is profit as a percentage of cost. A 50% margin equals a 100% markup. The calculator returns both.
The math
Margin = (Revenue − Cost) / Revenue. Markup = (Revenue − Cost) / Cost. If you sell at $100 with $40 cost: margin = 60%, markup = 150%.
Why margin matters more than markup
Margin tells you what percentage of every sales dollar is profit — directly comparable across companies and products. Markup is what you add on top, used in pricing decisions but not great for comparison. Wall Street talks margin; retail managers often talk markup.
Industry benchmarks (gross margin)
- SaaS — 70–90%. Software has near-zero marginal cost.
- Luxury goods — 60–80%. Brand premium.
- Consumer electronics — 30–50%.
- General retail — 20–40%.
- Grocery — 1–3%. Volume game.
- Construction — 5–15%. Variable depending on bid type.
Gross vs operating vs net
Gross margin = (revenue − COGS) / revenue. Just the direct cost of producing the good. Operating margin subtracts SG&A, R&D, and depreciation. Net margin subtracts everything including taxes and interest. A SaaS company with 80% gross margin might have 15% operating margin and 10% net margin once you account for sales, R&D, and overhead.