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Economic Context
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Track all deductible expenses throughout the year to maximize your effective tax position.
This tool uses updated tax brackets and VAT rates as of the latest regulatory announcements.
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Commission Calculator
The Commission Calculator computes sales commission and total earnings based on sales total and commission rate. Supports flat, tiered, and split commission structures.
Discount Calculator
The Discount Calculator computes the sale price, dollar savings, and total discount percentage from an original price and percentage off. Also calculates original price from sale price and discount rate.
Markup Calculator
The Markup Calculator computes selling price from cost and markup percentage, or calculates the markup percentage from cost and selling price. Markup = (Selling Price - Cost) / Cost x 100, which is cost-based unlike margin which is revenue-based.
What Is the Margin Calculator?
The Margin Calculator computes the gross profit margin percentage and profit amount from a cost and selling price. Gross Margin = (Revenue - Cost) / Revenue x 100. It also lets you calculate the required selling price from a target margin and cost, or the maximum cost from a target margin and price. For markup (cost-based pricing), see the markup calculator; for commission impact, see the commission calculator.
Gross margin is one of the most important metrics in business finance. It tells you what percentage of revenue remains after subtracting the direct cost of goods sold. A gross margin calculator lets you work out this figure instantly from any two of the three key inputs: revenue, cost, and gross margin percentage.
Gross Margin (%) = (Revenue - Cost) / Revenue × 100. This differs from markup, which calculates profit as a percentage of cost rather than revenue. Confusing the two is one of the most common pricing mistakes in small business, as noted by Harvard Business Review.
Gross Margin vs Markup: Key Difference
If you buy a product for $100 and sell it for $150:
- Gross Profit = $150 - $100 = $50
- Gross Margin = $50 / $150 = 33.3%
- Markup = $50 / $100 = 50%
The markup is always higher than the margin for the same profit. Given that, using the wrong formula when setting prices can leave you undercutting your actual target margin.
Gross Margin by Industry
| Industry | Typical Gross Margin |
|---|---|
| Software / SaaS | 70-90% |
| Retail (apparel) | 45-60% |
| Restaurants | 60-70% |
| Manufacturing | 25-40% |
| Grocery retail | 25-30% |
On top of that, knowing your industry's typical gross margin helps you figure out whether your business is competitive or if costs need to be reduced. The Investopedia gross margin guide provides additional context and interpretation.
Three Calculation Modes
This calculator supports three input modes so you can narrow down the unknown from any combination you have:
- Revenue + Cost: Computes gross margin % and markup %
- Revenue + Margin: Works out cost and gross profit
- Cost + Margin: Calculates revenue and profit
With that in mind, if you know your target margin and cost, you can carry out a reverse calculation to set your selling price. For example, to achieve a 40% margin on a $60 cost item: Revenue = $60 / (1 - 0.40) = $100.
Gross Margin and Net Margin
Gross margin excludes operating expenses, interest, and taxes. Net margin accounts for all of these. A business with 60% gross margin but 5% net margin has very high overhead. As a result, gross margin tells you production efficiency while net margin tells you overall business health. Use our Markup Calculator for pricing scenarios and the Commission Calculator to build up total cost models including sales compensation. The Corporate Finance Institute provides a thorough breakdown of how gross margin fits into the income statement.