Profit margin
Margin, markup, and the price each implies — struck from the same two numbers.
Gross margin
40.0%
One profit, two denominators
margin = profit ÷ revenue markup = profit ÷ cost price = cost ÷ (1 − margin) The same $40 profit on a $100 sale is a 40% margin but a two-thirds markup. Because margins shrink as prices fall while markups stay anchored to cost, mixing the two terms in negotiations produces real, quiet losses — the pricing solver exists so you never have to do that division in your head.
Assumptions on the counter
- Gross figures only — overhead, taxes, and labor load live elsewhere.
- Cost of zero makes markup undefined; the receipt says so.
- Target margins cap just under 100%, where no finite price exists.
Questions people ask
What is the difference between margin and markup?
Both describe the same profit, against different bases. Margin is profit ÷ revenue; markup is profit ÷ cost. A 40% margin is a 66.7% markup on the same sale — quoting one when someone means the other quietly misprices everything.
What price gives me a 40% margin?
Divide cost by (1 − margin): $60 ÷ 0.60 = $100. The pricing solver below runs that division for any margin you name.
What margin should a small business target?
That depends entirely on the industry and your overhead — grocery runs low single digits while software carries 70%+ gross margins. This tool does the math; it does not tell you which business to run.