★ MONEY · GROSS MARGIN · PROFIT
$100,000 of revenue and $60,000 of COGS is a $40,000.00 gross profit — a 40.00% margin and a 66.67% markup. Work out margin, markup and target price: the profit, the conversion both ways, and the price that holds your margin. This one is the GROSS-MARGIN tool — margin and markup on revenue and COGS — the cost-of-goods-sold-calculator page is the COGS tool — working out the cost itself — not the margin on it; the profit-margin-calculator page is the PROFIT-MARGIN tool — margin and markup on any profit figure — not gross margin specifically; and the gross-profit-margin-calculator page is the GROSS-PROFIT-MARGIN tool — the margin alone, without the markup conversion or the target price.
Put your revenue and COGS in: $100,000.00 of revenue and $60,000.00 of COGS is a $40,000.00 gross profit, a 40.00% margin and a 66.67% markup. The markup-to-margin conversion and the target price follow from the same numbers.
It means that of every $100.00 you take in, $40.00 is gross profit and $60.00 paid for the goods themselves. On the defaults — $100,000.00 of revenue and $60,000.00 of COGS — the profit is $40,000.00, which is 40.00% of the revenue. The margin is the share of the selling price you keep before rent, wages, tax and everything else; the markup is the same profit measured against the cost instead — 66.67% on the defaults, because $40,000.00 of profit on $60,000.00 of cost is two-thirds of the cost. Both numbers describe the same $40,000.00: the margin answers "what share of the price is profit", the markup answers "how much did I add to the cost".
Margin and markup are not interchangeable. A 66.67% markup is a 40.00% margin, and a 40.00% markup is a 28.57% margin — the two cross at 100%, where a 100% markup is a 50% margin. The confusion costs real money: pricing a job at "40% markup" when you meant "40% margin" leaves $11,428.57 on the table on every $100,000 of sales. If a supplier, a client or a spreadsheet says a percentage without saying which one, ask — the answer changes the price.
The margin is on the selling price, not the cost. At $150,000.00 of revenue with the same $60,000.00 of COGS the margin is 60.00%, and at $80,000.00 of revenue it is 25.00% — the same cost, very different margins, because the margin divides by the price. A cost cut and a price rise both lift the margin, but a cost cut lifts it further: cutting COGS by $10,000 takes the margin to 50.00%, while raising the price by $10,000 takes it to only 45.45%. Know which lever you are pulling.
Gross margin is not profit. The $40,000.00 here is gross profit — revenue minus the cost of the goods. Rent, wages, marketing, tax and interest still come out of it, which is why a 40.00% gross margin can sit next to a business losing money. Compare gross margins only between businesses that count COGS the same way: a retailer and a manufacturer put different things in COGS, so their margins are not comparable. The net margin is the number that says whether the business itself makes money.
On the defaults: $100,000 of revenue, $60,000 of COGS.
And the other way: a $100,000.00 revenue with a $40,000.00 profit is a 40.00% margin; $60,000.00 of COGS on $100,000.00 of revenue is the same margin; and a 40.00% margin on $100,000.00 of revenue needs $60,000.00 of COGS.
The defaults are $100,000 of revenue and $60,000 of cost of goods sold — the direct cost of what was sold: materials, production labour and anything bought to resell. The margin and markup are computed on those two numbers only, with no tax, no discount and no overhead in them. The markup-to-margin conversion uses the markup you type — 66.67% on the defaults — and the target price uses the cost and target margin you type — $60,000 and 40% on the defaults. A 25% markup is a 20.00% margin, and $45,000 of cost at a 40% margin prices at $75,000.00. Change the revenue and COGS to your own period before you trust the answer, and check what your books count as COGS — the margin is only as honest as that line.
These notes repeat in every explainer section because this page is built to be read start to finish: margin and markup are not interchangeable; the margin is on the selling price, not the cost; and gross margin is not profit.
| Output | Formula | What it means |
|---|---|---|
| Gross profit | revenue − COGS | $40,000.00 — $100,000 − $60,000. |
| Gross margin | profit ÷ revenue | 40.00% — $40,000 ÷ $100,000. |
| Markup | profit ÷ COGS | 66.67% — $40,000 ÷ $60,000. |
| Margin from markup | markup ÷ (1 + markup) | 40.00% — 66.67% markup is a 40.00% margin. |
| Markup from margin | margin ÷ (1 − margin) | 66.67% — a 40.00% margin is a 66.67% markup. |
| Target price | cost ÷ (1 − margin) | $100,000.00 — $60,000 ÷ 0.60. |
| Reverse: Find the revenue | step | $100,000.00: Gross profit $40,000.00 — $100,000 revenue, $60,000 COGS: margin 40.00%, markup 66.67%. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| Reverse: Find the COGS | step | $60,000.00: Gross profit $40,000.00 — $100,000 revenue, $60,000 COGS: margin 40.00%, markup 66.67%. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| Reverse: Find the margin | step | 40.00%: Gross profit $40,000.00 — $100,000 revenue, $60,000 COGS: margin 40.00%, markup 66.67%. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| COGS $50,000 instead of $60,000 | same model | Gross profit $50,000.00 — $100,000 revenue, $50,000 COGS: margin 50.00%, markup 100.00%. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| COGS $70,000 instead of $60,000 | same model | Gross profit $30,000.00 — $100,000 revenue, $70,000 COGS: margin 30.00%, markup 42.86%. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| Revenue $150,000 instead of $100,000 | same model | Gross profit $90,000.00 — $150,000 revenue, $60,000 COGS: margin 60.00%, markup 150.00%. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| Revenue $80,000 instead of $100,000 | same model | Gross profit $20,000.00 — $80,000 revenue, $60,000 COGS: margin 25.00%, markup 33.33%. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| A 25% markup instead of 66.67% | same model | Gross profit $40,000.00 — $100,000 revenue, $60,000 COGS: margin 40.00%, markup 66.67%. A 25.00% markup is a 20.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| $45,000 of cost at a 40% margin | same model | Gross profit $40,000.00 — $100,000 revenue, $60,000 COGS: margin 40.00%, markup 66.67%. A 66.67% markup is a 40.00% margin; $45,000 of cost at a 40.00% margin prices at $75,000.00.. |
| $0 COGS — no cost at all | same model | Gross profit $100,000.00 — $100,000 revenue, $0 COGS: margin 100.00%, markup —. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| COGS equals revenue — $100,000 | same model | Gross profit $0.00 — $100,000 revenue, $100,000 COGS: margin 0.00%, markup 0.00%. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| COGS above revenue — $120,000 | same model | Gross profit −$20,000.00 — $100,000 revenue, $120,000 COGS: margin −20.00%, markup −16.67%. A 66.67% markup is a 40.00% margin; $60,000 of cost at a 40.00% margin prices at $100,000.00.. |
| $0 revenue | same model | Revenue — more than $0.. |
Figures are the model's own totals on the numbers you type, computed from unrounded values: the profit is revenue minus COGS, the margin is the profit divided by the revenue, the markup is the profit divided by the COGS, and the target price is the cost divided by one minus the margin — the displayed percentages are rounded to 2dp, and the 66.67% markup converts to a 40.00% margin (40.0012 unrounded, because 66.67 is a hair above two-thirds of the 166.67 denominator). The model assumes the COGS you type is the direct cost of the goods sold and nothing else; it does not check your books, and it does not count rent, wages, tax, discounts or returns. Gross margin is not net profit: a healthy gross margin can sit next to a loss once overhead is counted. This page is a calculation tool, not accounting advice: talk to your accountant before you act on a margin.
$100,000 of revenue and $60,000 of COGS is a $40,000.00 gross profit — a 40.00% margin and a 66.67% markup. A 66.67% markup is a 40.00% margin; $60,000.00 of cost at a 40.00% margin prices at $100,000.00. Source: Bright Side Kit, brightoolbox.com.
Gross margin is the share of revenue left after the cost of goods sold: $100,000.00 of revenue and $60,000.00 of COGS is a 40.00% margin. It is the gross profit divided by the revenue.
Subtract COGS from revenue, then divide by revenue: ($100,000.00 − $60,000.00) ÷ $100,000.00 is 40.00%. The gross profit is $40,000.00.
Margin divides the profit by the price; markup divides it by the cost — a 66.67% markup is a 40.00% margin. The same $40,000.00 of profit is 40.00% of the price and 66.67% of the cost.
Divide the markup by one plus the markup: 66.67% ÷ 166.67% is 40.00%. A 25% markup converts to a 20.00% margin.
Divide the cost by one minus the margin: $60,000.00 ÷ 0.60 is $100,000.00 at a 40.00% margin. That is the price that holds the margin.
It depends on the trade — retailers often run 20–40% and software far higher. Compare against businesses that count COGS the same way; a margin alone says nothing about net profit.
Only with $0 COGS — $100,000.00 of revenue and no cost is a 100.00% margin. The markup is undefined there, because there is no cost to divide by.
Yes — $60,000.00 of COGS on less revenue would be negative, and $120,000 of COGS on $100,000 of revenue is a −20.00% margin. Selling below cost loses money on every sale.