Business
Gross Margin Calculator
Enter cost and selling price to see gross profit, margin and markup.
Gross margin versus markup
An item bought for £60 and sold for £100 has £40 profit, 40% margin and 66.7% markup. Mixing the two when you set prices is a common way to undercharge. This calculator shows profit, margin and markup from cost and price so your team shares one language. For a true kept margin, include variable selling fees in cost or reduce the selling price to net received. Convert either way with markup vs margin and set prices with reverse margin. Check unit cash with product profit when packaging and payment fees sit outside a simple cost field. Planning maths only — not accounting advice. Product teams reviewing SKU health should sort by margin pounds as well as margin percent so hero lines are obvious. Bundles need a combined cost before you trust the blended percentage. When finance reports ‘gross margin’ after warehouse labour, ask which definition they use so commercial pricing meetings stay aligned.
Worked example
Cost £60, price £100: profit £40, margin 40%, markup 66.7%. If a 10% marketplace fee applies, net price is £90 and true margin on cost becomes 30 ÷ 90 ≈ 33.3% unless you raise the ticket. Teams that quote ‘40% margin’ while ignoring fees quietly give away the difference.
Limits and assumptions
Gross margin sits before overheads, tax and interest. VAT-inclusive versus ex-VAT inputs must match. Bundles and free gifts need a combined cost basis.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit ÷ selling price. Markup is profit ÷ cost. The percentages differ for the same deal.
Should fees be in the cost?
For a true kept margin, include variable selling fees in cost or reduce the selling price to net received.
Is gross margin the same as net profit?
No. Gross margin sits before overheads, tax and interest. Net profit is after those.
How do discounts change margin?
Enter the price the customer pays after discounts. Full list price overstates margin during promotions.
Can margin be negative?
Yes if you sell below cost. The calculator will show the loss — fix price or cost before scaling.