Margin Calculator

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Margin Calculator
Find Margin (using Cost and Revenue)Find Revenue (using Cost and Margin %)Find Cost (using Revenue and Margin %)
Results:
function updateInputs(){var type=document.getElementById('calc_type').value;var r1=document.getElementById('row1');var r2=document.getElementById('row2');var r3=document.getElementById('row3');var l1=document.getElementById('label1');var l2=document.getElementById('label2');var l3=document.getElementById('label3′);r1.style.display='table-row';r2.style.display='table-row';r3.style.display='table-row';if(type==='margin'){r3.style.display='none';l1.innerHTML='Cost ($):';l2.innerHTML='Revenue ($):';}else if(type==='revenue'){r2.style.display='none';l1.innerHTML='Cost ($):';l3.innerHTML='Margin (%):';}else if(type==='cost'){r1.style.display='none';l2.innerHTML='Revenue ($):';l3.innerHTML='Margin (%):';}document.getElementById('calculatorAnswer').style.display='none';}function calculateResult(){var type=document.getElementById('calc_type').value;var cost=parseFloat(document.getElementById('input1').value);var rev=parseFloat(document.getElementById('input2').value);var margin=parseFloat(document.getElementById('input3′).value);var profit, markup, result_margin, result_rev, result_cost;var output=", steps=";if(type==='margin'){if(isNaN(cost)||isNaN(rev)){alert('Please enter Cost and Revenue');return;}profit=rev-cost;result_margin=(profit/rev)*100;markup=(profit/cost)*100;output='Gross Profit: $'+profit.toFixed(2)+'
Gross Margin: '+result_margin.toFixed(2)+'%
Markup: '+markup.toFixed(2)+'%';steps='1. Profit = Revenue – Cost = '+rev+' – '+cost+' = '+profit.toFixed(2)+'
2. Margin = (Profit / Revenue) * 100 = ('+profit.toFixed(2)+' / '+rev+') * 100 = '+result_margin.toFixed(2)+'%';}else if(type==='revenue'){if(isNaN(cost)||isNaN(margin)){alert('Please enter Cost and Margin %');return;}result_rev=cost/(1-(margin/100));profit=result_rev-cost;markup=(profit/cost)*100;output='Revenue: $'+result_rev.toFixed(2)+'
Gross Profit: $'+profit.toFixed(2)+'
Markup: '+markup.toFixed(2)+'%';steps='1. Revenue = Cost / (1 – (Margin / 100)) = '+cost+' / (1 – '+ (margin/100)+') = '+result_rev.toFixed(2)+'
2. Profit = Revenue – Cost = '+result_rev.toFixed(2)+' – '+cost+' = '+profit.toFixed(2);}else if(type==='cost'){if(isNaN(rev)||isNaN(margin)){alert('Please enter Revenue and Margin %');return;}result_cost=rev*(1-(margin/100));profit=rev-result_cost;markup=(profit/result_cost)*100;output='Cost: $'+result_cost.toFixed(2)+'
Gross Profit: $'+profit.toFixed(2)+'
Markup: '+markup.toFixed(2)+'%';steps='1. Cost = Revenue * (1 – (Margin / 100)) = '+rev+' * (1 – '+(margin/100)+') = '+result_cost.toFixed(2)+'
2. Profit = Revenue – Cost = '+rev+' – '+result_cost.toFixed(2)+' = '+profit.toFixed(2);}document.getElementById('answer').innerHTML=output;document.getElementById('calculatorAnswer').style.display='block';if(document.getElementById('steps').checked||document.getElementById('show_steps').checked){document.getElementById('steps_output').innerHTML=steps;document.getElementById('steps_output').style.display='block';}else{document.getElementById('steps_output').style.display='none';}}

Calculator Use

This margin calculator is a specialized tool designed for business owners, entrepreneurs, and sales professionals to quickly determine the profitability of their products or services. By inputting key financial variables, you can instantly calculate gross margin, profit, markup, and required selling prices.

Understanding your numbers is critical for sustainable growth. This tool allows you to switch between three primary calculation modes:

  • Find Margin: Use this when you know your cost and your intended selling price to see how much profit you are keeping.
  • Find Revenue: Use this to determine what price you should charge based on your cost and a target profit margin percentage.
  • Find Cost: Use this to find the maximum amount you can spend on manufacturing or acquisition to maintain a specific profit margin at a fixed price point.

How It Works

The margin calculator uses standard accounting formulas to derive its results. While "margin" and "markup" are often used interchangeably in casual conversation, they represent very different financial metrics.

The Gross Margin Formula

Margin is always calculated based on the Selling Price (Revenue). It represents the percentage of each dollar of revenue that the company retains as gross profit.

Gross Margin % = ((Revenue – Cost) / Revenue) * 100

Margin vs. Markup

Markup is calculated based on the Cost. It represents how much more the selling price is than the cost of the item.

  • Margin = (Profit / Revenue) x 100
  • Markup = (Profit / Cost) x 100

For example, if an item costs $100 and sells for $150, the profit is $50. The markup is 50%, but the margin is only 33.3%.

Calculation Example

Scenario: You are launching a new boutique candle. The cost to produce one candle (wax, wick, jar, scent, and labor) is $8.00. You want to achieve a 60% gross margin. What should the retail price be?

Step-by-step solution:

  1. Identify Variables: Cost = $8.00, Target Margin = 60% (or 0.60).
  2. Choose Formula: Revenue = Cost / (1 – Margin).
  3. Calculation: Revenue = 8.00 / (1 – 0.60).
  4. Calculation: Revenue = 8.00 / 0.40.
  5. Result: Revenue = $20.00.
  6. Verify: Gross Profit = $20 – $8 = $12. Margin = $12 / $20 = 0.60 (60%).

Common Questions

What is a "good" profit margin?

A "good" margin varies wildly by industry. For example, clothing retailers often aim for a 50-60% margin, while grocery stores may operate on thin margins of 1-3% but compensate with high volume. Generally, a gross margin of 50% or higher is considered healthy for small businesses.

Can a margin be negative?

Yes. If your cost of goods sold (COGS) is higher than your revenue, you have a negative margin. This means you are losing money on every sale, which is unsustainable in the long term unless you are using a "loss leader" strategy to attract customers for other more profitable items.

Why does the margin calculator show Markup as well?

We include Markup because it is helpful for setting initial pricing strategies. Many wholesalers use a "keystone" markup, which is 100% (doubling the cost), resulting in a 50% margin. Having both numbers helps you communicate effectively with different vendors and distributors who may prefer one metric over the other.

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