Markup is the percentage added to the cost to arrive at the selling price. Margin is the percentage of the selling price that is profit. For example, a $100 item sold for $150 has a 50% markup but a 33.3% margin.

Profit margin = (Revenue − Cost of Goods) ÷ Revenue × 100. For example, if you earn $1,000 in revenue and your costs are $600, your profit margin is ($1,000 − $600) ÷ $1,000 × 100 = 40%.

It varies by industry. Retail typically runs 2–5% net margin, software can exceed 70% gross margin, and restaurants average 3–9%. A 'good' margin is one that covers your operating costs and meets your growth goals.

Gross margin measures profit after subtracting cost of goods sold (COGS). Net margin goes further — it subtracts all expenses including operating costs, taxes, and interest. This calculator focuses on gross margin.

Yes. For services, your 'cost of goods' is typically the direct labor and materials cost to deliver the service. Enter that as your cost, and your revenue is what you charge the client.

Because they use different bases. A 50% markup adds half the cost on top ($100 cost → $150 price). But the margin is calculated from the price: $50 profit ÷ $150 price = 33.3% margin. Markup is always a larger number than margin for the same transaction.