Business Pricing Tool
Profit Margin & Markup Calculator
Calculate selling price, gross profit, margin percentage, and markup from your Cost of Goods Sold (COGS). Easily add state and local sales tax to calculate the final invoice total for US customers.
Enter Cost & Desired Profit
Toggle this option if you invoice US customers or charge destination sales tax at retail checkout. It calculates the final total your customer will pay.
$83.33
Pre-tax invoice subtotal
$33.33
Revenue minus Cost
40.00%
Profit as % of Selling Price
66.67%
Profit as % of Cost
Margin vs. Markup: The Most Common Mistake in Business Pricing
One of the fastest ways a small business or ecommerce seller loses money is by confusing markup with profit margin. While both metrics measure profitability using the exact same dollar profit, they use completely different bases:
Gross Margin (%)
Margin measures what percentage of the selling price is profit. It tells you how much money remains from every sales dollar after paying for the product.
Margin = (Profit / Revenue) × 100
Markup (%)
Markup measures how much you mark up the product above its original cost. It tells you how much to add to your wholesale cost to reach your target price.
Markup = (Profit / Cost) × 100
For a complete breakdown of wholesale pricing formulas, worked retail case studies, and cash flow strategies, explore our comprehensive Gross Margin vs. Markup Pricing Guide.
Margin to Markup Conversion Quick Reference
Use this conversion table to quickly match your desired profit margin with the required markup percentage:
| Cost (COGS) | Desired Margin | Required Markup | Selling Price | Gross Profit |
|---|---|---|---|---|
| $50.00 | 15.0% | 17.65% | $58.82 | $8.82 |
| $50.00 | 20.0% | 25.00% | $62.50 | $12.50 |
| $50.00 | 33.3% | 50.00% | $75.00 | $25.00 |
| $50.00 | 50.0% | 100.00% (Keystone) | $100.00 | $50.00 |
Invoicing US Customers: Factoring In Sales Tax
When selling goods or taxable services in the United States, your invoice must clearly distinguish between your taxable sales revenue and the state and local sales tax you are legally required to collect.
If you ship products to customers in multiple states, check your sales tax economic nexus thresholds to ensure you only collect sales tax in states where you are legally registered.
Frequently Asked Questions
What is the difference between margin and markup?+
Gross margin is profit expressed as a percentage of the selling price (Revenue). Markup is profit expressed as a percentage of the cost (COGS). For example, if an item costs $50 and sells for $100, the profit is $50: the gross margin is 50% ($50 / $100), but the markup is 100% ($50 / $50).
How do you calculate gross profit margin?+
To calculate gross profit margin: subtract the Cost of Goods Sold (COGS) from the selling price to get Gross Profit. Then divide the gross profit by the selling price and multiply by 100: Margin = ((Price - Cost) / Price) * 100.
How do you calculate markup?+
To calculate markup: subtract Cost from the selling price to find Gross Profit, then divide by Cost and multiply by 100: Markup = ((Price - Cost) / Cost) * 100.
Does sales tax affect your profit margin?+
No. Sales tax is a trust fund tax collected from customers on behalf of state and local governments. It does not belong to the business and does not count as revenue or profit, though failing to collect it correctly can quickly destroy your operating profits.