Finance Margin Calculator
Finance Margin Calculator
Calculate gross margin, net margin, markup, and break-even price for your business. Enter cost price, selling price, and adjustments to understand your profitability and pricing strategy.
Calculate your margin
Finance Margin Calculator
Enter cost price, selling price, and adjustments to calculate gross margin, net margin, markup, and break-even price.
Your Results
Fill in cost price and selling price, then click Calculate Margin to see gross margin, net margin, and markup.
Understanding margin
What is Margin in Finance?
Margin is a key profitability metric that shows how much of your selling price remains as profit after accounting for costs. Understanding margin helps you price products correctly and evaluate business performance.
Gross Margin
Gross margin is the difference between net selling price and cost price. It shows profit before deducting other expenses like taxes, fees, or operating costs. Gross margin % = (Gross Margin ÷ Net Selling Price) × 100.
Net Margin
Net margin is gross margin minus other charges (fees, taxes, operating costs). It represents the actual profit you keep after all deductions. Net margin % = (Net Margin ÷ Net Selling Price) × 100.
Markup
Markup is the percentage added to cost price to arrive at selling price. Markup % = (Net Margin ÷ Cost Price) × 100. Unlike margin (based on selling price), markup is based on cost price and is often higher in percentage terms.
Comparison
Difference Between Margin and Markup
Margin and markup are related but calculated differently. Understanding the difference helps you communicate pricing and profitability correctly.
| Aspect | Margin | Markup |
|---|---|---|
| Definition | Profit as % of selling price | Profit as % of cost price |
| Formula | (Profit ÷ Selling Price) × 100 | (Profit ÷ Cost Price) × 100 |
| Base | Based on revenue (selling price) | Based on cost |
| Use case | Evaluate profitability on sales | Set selling price from cost |
| Example | ₹20 profit on ₹100 sale = 20% margin | ₹20 profit on ₹80 cost = 25% markup |
Formulas
Margin Calculation Formulas
Use these formulas to understand how margin, net selling price, and break-even are calculated.
Example
Example Margin Calculation
See how margin is calculated with a simple example.
Scenario: Product with discount and tax
Step 1: Net Selling Price = 800 − 80 − 144 = ₹576
Step 2: Gross Margin = 576 − 500 = ₹76
Step 3: Gross Margin % = (76 ÷ 576) × 100 = 13.19%
Step 4: Net Margin = 76 − 30 = ₹46
Step 5: Markup % = (46 ÷ 500) × 100 = 9.2%
Step 6: Break-even Price = 500 + 30 = ₹530
FAQ
Finance Margin Calculator FAQs
Common questions about margin, markup, pricing, and profitability.
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What is gross margin?
Gross margin is the difference between net selling price and cost price. It represents profit before deducting other expenses like taxes, fees, or operating costs. Gross margin % = (Gross Margin ÷ Net Selling Price) × 100. It's a key metric for evaluating product profitability.
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What is net margin?
Net margin is gross margin minus other charges (fees, taxes, operating costs). It represents the actual profit you keep after all deductions. Net margin % = (Net Margin ÷ Net Selling Price) × 100. Net margin is a more accurate measure of true profitability than gross margin.
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What is the difference between margin and markup?
Margin is profit as a percentage of selling price (profit ÷ selling price × 100). Markup is profit as a percentage of cost price (profit ÷ cost price × 100). For the same profit, margin % is lower than markup % because selling price is higher than cost. Example: ₹20 profit on ₹100 sale = 20% margin; ₹20 profit on ₹80 cost = 25% markup.
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What is break-even price?
Break-even price is the minimum selling price at which you cover cost price and other charges with zero profit. Below this price you make a loss. Break-even Price = Cost Price + Other Charges. It's the floor for your selling price and helps you set minimum viable pricing.
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How do discount and tax affect margin?
Discount reduces the amount you receive from the sale, and tax may be collected from the customer but remitted to the government. In this calculator, both are deducted from selling price to get net selling price. Net selling price is then used to calculate gross margin. Lower net selling price means lower margin if cost stays the same.
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What is a good profit margin?
Good profit margins vary by industry. Retail typically aims for 20–50% gross margin; ecommerce may be 10–30% net margin after fees. Service businesses often have higher margins (50%+). Use industry benchmarks and your break-even to set target margins. The calculator helps you see how pricing and adjustments affect your margin.
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How do I improve my margin?
To improve margin: increase selling price (if market allows), reduce cost price (sourcing, bulk buying), reduce discounts and promotions, minimize other charges (fees, shipping costs), and optimize operations. Use the calculator to test different scenarios and find the right balance between price and volume.
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Are the calculator results accurate for all businesses?
The calculator provides estimated results based on the values you enter. Actual margins may vary based on your accounting method, tax treatment, and how you allocate costs. Use the output for planning and analysis. Always verify with your accountant or financial statements. This calculator provides estimated results only.