How profit margin works
Gross profit = revenue − cost. Profit margin = gross profit ÷ revenue × 100%. Markup = gross profit ÷ cost × 100%.
Example
If an item sells for $125 and costs $75, gross profit is $50, profit margin is 40%, and markup is about 66.67%.
Important limitations
This calculator excludes taxes, financing and other operating expenses. Interpret results using your chosen definition of cost.