Margin calculator

Calculate the gross margin percentage, mark up percentage and gross profit of a sale from the cost (input price) and revenue or selling price of an item. Revenue means selling (output) price.


In sales and business, margin refers to the difference between the revenue generated from selling a product or service and the costs associated with producing or delivering it. It is a key metric used to measure profitability. There are several types of margins, but the most common ones are gross margin, operating margin, and net margin. Here is a breakdown:

Gross Margin:

- Gross margin measures the profitability of a product or service after accounting for the cost of goods sold (COGS).
- COGS includes direct costs like materials, labor, and manufacturing expenses.
- Formula:

- Gross Margin Percentage:

- Example: If a product sells for $100 and the COGS is $60, the gross margin is $40, and the gross margin percentage is 40%.

Operating Margin:

- Operating margin accounts for both COGS and operating expenses (e.g., salaries, rent, utilities, marketing).
- It reflects the profitability of a company's core business operations.
- Formula:

- Operating Margin Percentage:

- Example: If revenue is $100, COGS is $60, and operating expenses are $20, the operating margin is $20, and the operating margin percentage is 20%.

Net Margin:

- Net margin is the most comprehensive measure of profitability. It accounts for all expenses, including COGS, operating expenses, taxes, interest, and other non-operating costs.
- Formula:

- Net Margin Percentage:

- Example: If revenue is $100, total expenses are $80, the net margin is $20, and the net margin percentage is 20%.

Why Margin Matters:

1. Profitability Analysis: Margins help businesses understand how efficiently they are converting revenue into profit.
2. Pricing Strategy: Margins influence pricing decisions to ensure costs are covered and profits are achieved.
3. Performance Comparison: Margins allow businesses to compare their performance against competitors or industry benchmarks.
4. Financial Health: Higher margins indicate better financial health and the ability to reinvest in the business or withstand economic downturns.

Example Calculation:

- A company sells a product for $200.
- The COGS is $120.
- Operating expenses are $40.
- Taxes and other expenses are $10.

1. Gross Margin:



2. Operating Margin:



3. Net Margin:




In summary, margin is a critical metric in sales and business that helps assess profitability at different levels of operations. It is expressed either as a dollar amount or a percentage of revenue.