Margin calculator
A margin calculator shows gross profit as a percentage of revenue. Subtract costs from revenue, divide the result by revenue, and multiply by 100. Margin is not the same as markup, which divides profit by cost. Use the calculator below to check a margin or find a target selling price.
Margin and markup
Both, side by side, from one set of numbers
Target price
The price that gives the margin you want
Service costs
Build the cost from hours at internal cost
Use the margin calculator
Check the gross margin and markup on a price, or find the price that gives a target margin. Build the cost from hours if you like; the result names every included cost.
Margin
Enter revenue and costs, or a cost and a target margin, to see the result.
This result is out of date. Fix the highlighted field to update it.
- Gross profit
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- Gross margin
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- Markup
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- Revenue
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- Included costs
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Assumptions
Gross margin on included costs
The result covers only the costs you enter. It is not net profit, not a tax figure, not an industry benchmark, and not a trading or investment margin.
Calculated in your browser. Prices, costs and hours are not sent to a server or written to the page address. Consented analytics record only that a margin was calculated and which mode was used.
Profit margin calculator
Gross margin formula
Gross margin = (revenue − included costs) ÷ revenue × 100. It tells you what share of the price is left after the costs you chose to include. The result only means something when revenue is above zero and you have decided which costs are in: this calculator shows "undefined" rather than a number when the ratio has no denominator.
Revenue 100, cost 80 → (100 − 80) ÷ 100 = 20% gross margin
Revenue 80, cost 100 → (80 − 100) ÷ 80 = −25% (a loss)Markup calculator
Margin versus markup
Markup divides the same profit by cost instead of revenue. A cost of 80 sold for 100 is 25% markup but 20% margin. The two are often confused when quoting, and a 20% markup is not a 20% margin: at cost 100 it gives a price of 120 and a margin of 16.67%.
Because both use the same profit figure, the calculator always shows them together so the quote and the report agree.
Pricing
Price for a target margin
Price = cost ÷ (1 − target margin). For cost 100 and a 20% target the price is 125, before any tax you apply separately. A target of 100% or more has no finite price, so the calculator rejects it rather than clamping it, and a zero cost has no ratio to hit.
Prices are rounded to the minor unit. When that rounding moves the margin off the target, the calculator says so and shows the margin the rounded price actually gives.
Project profitability
A service-project example
Labour and direct costs
ExampleA hypothetical project sold for 1,500 takes 20 hours at an internal cost of 40 per hour (800) plus 200 of subcontracted design. Included costs are 1,000, gross profit 500, gross margin 33.33% and markup 50%. The internal cost per hour is what the hour costs the business, which is not the same as the rate billed to the client.
Costs not included
Rent, software, insurance, tax and the time spent winning the project are not in that figure. Gross margin is a project-level check; whether the business is profitable needs those costs added on the same basis for every project.
Frequently asked questions
Margin and markup questions
What is the gross margin formula?
Gross margin is (revenue − included costs) / revenue × 100. The result is meaningful only when revenue is greater than zero and the included cost basis is clear.
How is markup different?
Markup divides the same profit by cost rather than revenue. Cost 80 and price 100 gives 25% markup but 20% margin.
How do I calculate a price for a target margin?
Divide cost by 1 − target margin as a decimal. For cost 100 and margin 20%, the price is 125 before any tax treatment you separately apply.
Can margin be negative?
Yes. When included costs exceed revenue, the result is a loss and the gross margin is negative.
Does this include tax or every business expense?
No. Include the costs you want to analyse consistently and use revenue on the same tax basis. The result is not automatically your business's net profit.
Can I include employee or contractor time?
Yes. In the service-cost helper, enter hours and cost per hour, then add other included project costs. A billing rate is not necessarily a labour cost rate.
Is this a trading margin calculator?
No. It estimates gross profit margin and markup for costs and prices; it does not calculate leverage, collateral or investment risk.
Related tools
More free tools for time and billing
Next step
See the real margin, not the quoted one
Tracking time and costs against each project shows how the hours actually landed against the price, and feeds the same figures into budgets and invoices.