Margin Calculator
Calculate profit margin, markup, and selling price from cost.
Calculator
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Gross profit: ₹400.00
Gross margin: 33.3%
Markup: 50.0%
Formula
Gross margin (%) = (Selling price − Cost) / Selling price × 100. Markup (%) = (Selling price − Cost) / Cost × 100. Selling price from margin = Cost / (1 − Margin%).
Example calculation
Cost ₹800, selling price ₹1,200: Margin = (1200−800)/1200 × 100 = 33.3%. Markup = (1200−800)/800 × 100 = 50%. To achieve 40% margin: price = 800/(1−0.4) = ₹1,333.
Engineering notes
Margin and markup are often confused. A 50% markup is NOT a 50% margin. Margin is calculated on selling price; markup is calculated on cost. For pricing decisions, always work with margin (not markup) to ensure your revenue targets are correctly calculated.
When to use this calculator
- Product pricing — set selling prices that achieve target gross margin across the product range
- Discount analysis — determine how much discount can be offered without falling below the minimum margin
- Sales commission — calculate gross margin after deducting sales commission to ensure profitability
- Tender pricing — work back from a target margin to a competitive selling price
- P&L review — quickly check whether a product line is achieving the planned margin percentage
Frequently asked questions
- What is a good gross margin for manufacturing businesses?
- Gross margin benchmarks vary widely by industry: contract manufacturing 5–15%, industrial equipment 25–40%, specialty chemicals 30–50%, engineered products 35–55%, software and technology 60–80%. Net margin (after overheads, depreciation, and tax) is typically 3–10% for Indian manufacturers. Compare your margins with published industry benchmarks from your sector.
- What is the difference between gross margin and net margin?
- Gross margin = (Revenue − Cost of Goods Sold) / Revenue × 100. It covers only direct production costs. Net margin = Net profit after tax / Revenue × 100. It deducts all expenses: selling, distribution, admin overheads, depreciation, finance charges, and tax. Gross margin shows manufacturing efficiency; net margin shows overall business profitability. You need both to manage a business.
- How do I use margin to set prices across a product catalogue?
- Set a minimum acceptable gross margin (floor margin) for each product category based on the overhead it absorbs. Products with high overhead absorption (complex, labour-intensive) need higher margins. Calculate cost for each SKU, then divide by (1 − target margin) to get the floor selling price. Add a premium for high-value or low-competition products. Review and adjust prices at least annually as costs change.
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