Margin and markup use different denominators
Gross profit per unit = selling price − product cost. Gross margin, % = gross profit ÷ selling price × 100. Markup, % = gross profit ÷ product cost × 100. Both gross rates here are before selling costs. The same percentage markup and margin produce different selling prices.
Worked example: cost 600, price 1,000
The difference is 400: a 40% gross margin and 66.67% markup. With another 50 in selling costs and a fee of 10% of price, the fee is 100 and the amount remaining is 250, or 25% of price. That is not yet net profit for the month.
Price from a target percentage
For a target gross margin: price = cost ÷ (1 − percentage ÷ 100). For a target markup: price = cost × (1 + percentage ÷ 100). At a cost of 600, a 30% gross margin requires a price of 857.15 after rounding up to cents; a 30% markup requires 780. Selling costs reduce the remaining amount but do not change the meaning of the gross target.
Which selling costs to include
Enter additional costs per unit sold and deductions as a percentage of its selling price. Do not repeat shipping or packaging already included in product cost. This is not a marketplace tariff integration, VAT calculation or tax-regime selector.
Zero values and selling below cost
At a zero selling price, gross margin is undefined. At zero product cost, markup is undefined. A known price can be compared with zero cost, but a target percentage cannot determine a price from it. A price below cost produces negative rates: a loss is not replaced with zero.
Precision and limits
Amounts accept two decimal places and percentages four. A target price is rounded up to cents so rounding does not undershoot the target; fees are rounded half up to cents. Displayed percentages use two decimal places. Currencies are not converted. Fixed overhead, returns, unsold inventory and separate taxes are outside this calculation.