Calculate gross profit margin and markup side-by-side, with industry benchmarks (SaaS, e-commerce, restaurants, agency, manufacturing and 8 more), multi-country tax handling (US / UK / EU / India / UAE / AU / CA), reverse pricing ("what should I charge for X% margin?"), and an itemised COGS breakdown.
The single most expensive pricing mistake in small business is confusing margin with markup — they use the same numbers but different denominators, and getting them backwards costs sustainable margins fast. This calculator solves three questions in one tool: (1) given a price and costs, what's my real margin and markup? (2) given a target margin, what should I charge? (3) is my margin healthy for my industry? It models the full COGS stack — materials, labour, overhead, shipping, packaging, payment-processor fees, other variable costs — handles tax-inclusive vs tax-exclusive pricing across 7 countries (US sales tax, UK 20% VAT, EU 20% VAT, India 18% GST, UAE 5% VAT, Australia 10% GST, Canada GST/HST), benchmarks against 13 industry-specific gross-margin ranges (SaaS 70–85%, e-commerce 35–50%, agency 50–70%, restaurants 60–70%, etc.), shows margin and markup formulas side-by-side with the working math visible, includes a markup→margin reference ladder for converting between the two, and rolls up to total revenue and total profit for any unit volume. Saves to localStorage; share scenarios via URL hash.
If you take one thing from this tool, take this: margin and markup are not the same number, even when applied to the same product. They share a numerator (profit) and differ only in the denominator. Margin divides profit by the selling price; markup divides profit by the cost. The denominators move in opposite directions as your profit grows.
Concrete example. You buy a widget for $40 and sell it for $60. Profit is $20.
Same product, same dollars, two different percentages. Now imagine someone tells you their reseller wants a "30% margin". You apply a 30% markup, sell at $52, and end up with a 23% margin — a quarter less profit than promised. Multiply that across every line of business and you have why 60% of small businesses fail within 5 years.
The conversion table is short and worth memorising:
Going the other way (your client says "I need 50% margin"):
Industries that quote in markup terms: retail wholesale, restaurant menu pricing, contractor bidding, jewellery, fashion. Industries that quote in margin terms: SaaS, agencies, accounting, public-company financial reporting. If you cross those worlds without a converter, you will lose money. The tool keeps both visible at all times for that reason.
COGS (Cost of Goods Sold) is the variable cost that scales with each unit sold. The textbook definition is clean; in practice, small operators routinely miss line items that quietly compress real margin by 5–15 percentage points.
The calculator gives you 7 named cost lines plus an "Other" row. Use them all. The whole point of computing margin is to know what slack you actually have — undercounting COGS gives you a fictional cushion that disappears the moment you scale.
"Is X% margin good?" is the most common follow-up question after computing margin. The honest answer is "depends on your industry" — best-in-class SaaS hits 85%, best-in-class auto-dealer is delighted with 12%, and both are healthy businesses. The 13 benchmark ranges in this tool are 2026 estimates pulled from public-company data, RMA Annual Statement Studies, IBISWorld industry reports, and the OpenView / KeyBanc SaaS Surveys.
Sub-sector and geography swing margins enormously. Within "Apparel": fast fashion fights for 35–45% margin while DTC luxury sits at 65–75%. Within "Restaurants": fine dining hits 70% gross (low food cost) but burns it on labour and rent; QSR / fast food sits at 55–60% gross with much higher net.
If your computed margin is below the industry low end, the tool flags it amber — investigate. Common causes:
If your margin is above the industry high end, that's either premium positioning (good — protect it with branding and quality) or a pricing advantage that won't survive competitive pressure (bad — bank the margin while it lasts and reinvest in moat).
SaaS startups are notorious for this. 80% gross margin and a $40M loss in the same year is normal in early-stage SaaS. Gross margin sets the ceiling; operating expenses determine whether you actually make money. Use this tool for the ceiling math, then track CAC, payback, and operating leverage separately to understand the floor.
Margin is always computed on net (ex-tax) revenue, never gross (inc-tax). The reason: tax money is not yours — it transits your account on its way to the government. Computing margin on gross revenue inflates the number by the tax rate, which is fictitious.
If you sell internationally on Shopify or WooCommerce and your prices are tax-inclusive in Europe but tax-exclusive in the US, you must toggle the right setting per market or your margin numbers will be off by exactly the tax rate. A UK sale at £120 looks like a £20 better margin than a US sale at $120 if you forget to subtract VAT — but they're identical net.
One mental model that helps: VAT/GST is collected by you on behalf of the tax authority. You owe it to them at the next filing date. It must not be in any margin calculation, profit forecast, or cash-flow planning that goes beyond the next remittance period.
They use the same profit but different denominators. Margin = profit ÷ selling price (so it's capped at 100%). Markup = profit ÷ cost (so it can exceed 100% — a 200% markup means tripling your cost). Same numbers, very different percentages: a 50% markup is only a 33% margin. Most pricing mistakes come from someone saying "30% margin" when they actually mean "30% markup", and vice versa. The tool shows both side-by-side so you can't confuse them.
Margin for thinking about profitability and comparing to industry benchmarks (everyone reports gross margin). Markup for the moment-of-pricing math when you start from cost — "I paid $40, I'll mark up 50%, so I sell at $60". Just remember $60 with $40 cost is a 33% margin, not 50%. The tool converts between them automatically.
Three usual causes: (1) you forgot a COGS line — payment processor fees (~3%), packaging, return rate, or shipping subsidies often get omitted; (2) you're including fixed costs (rent, salaries) in COGS, which deflates gross margin — those belong in the net-margin calculation, not gross; (3) you're genuinely underpricing — many small operators absorb cost increases instead of repricing. Try the reverse mode with your industry midpoint as target margin and see what list price the math demands.
Yes — they scale per transaction, so they belong in COGS for accurate gross-margin reporting. Stripe / Square / PayPal typically take 2.4–3.5% per transaction. On a $50 sale that's $1.50, which is 3% off your gross margin. Most calculators leave this out. We have a dedicated row for it (and a sister Payment Processing Fee Calculator if you want exact rates).
In countries with VAT/GST (UK, EU, India, UAE, Australia, Canada), retail prices are typically quoted including the tax — a £120 product is £100 + £20 VAT. If you toggle "Price includes tax", the tool strips the tax out before computing margin, because margin is always calculated on the net (ex-tax) revenue you actually keep. In the US toggle stays off because state sales tax is added on top of list, not embedded.
A common founder mistake. Cloud hosting, API costs, third-party SaaS dependencies (Auth0, Sendgrid, Twilio) are absolutely COGS for SaaS — they scale with users. Best-in-class SaaS hits 80%+ gross margin only after these are subtracted. If your true SaaS margin is 50–60%, you have an infrastructure-heavy product (which is fine, but VCs price it differently — closer to a "service" than a true SaaS).
Those are operating expenses, not COGS. They affect net margin (operating margin), not gross margin. This calculator computes gross margin only — what you have left after the variable cost of producing each unit. Net margin = gross margin − operating expenses ÷ revenue, and is typically 5–25% for healthy SMBs even when gross margins are 40–70%. Treat the gross figure here as the ceiling on what fixed costs can consume.
Ranges are 2026 estimates from public-company filings, NAICS / industry surveys (RMA, IBISWorld), and SaaS/e-commerce community data (KeyBanc SaaS Survey, Shopify Plus benchmarks, OpenView SaaS Benchmarks). Sub-sectors vary widely — branded skincare e-commerce can hit 70% margin, commodity electronics struggles at 20% — so use the range as a sanity check, not a target. Pick the closest match to your business; "Other" gives a generic mid-range.
Yes — for services, COGS is direct delivery cost: contractor labour, third-party software passed through, hosting, sub-licences. Use the "Agency / Consulting" benchmark (50–70% margin). The math is identical — service margin is calculated the same way as product margin. The Freelance Hourly Rate Calculator is the right tool if you're pricing your time as an individual; this tool is for businesses with COGS rolled up across multiple cost lines.
No. Everything runs in your browser; inputs save to localStorage and the share-URL hash, both on your device. Nothing is transmitted to any server.
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