Transparent calculations

Methodology & Sources

Business Math Tools is built for quick, inspectable planning. Calculators run in your browser and use only the values you enter. Results are estimates, not accounting records or professional advice.

Profit margin calculator

Gross profit equals revenue minus direct cost. Gross margin equals gross profit divided by revenue, multiplied by 100. Markup equals gross profit divided by direct cost, multiplied by 100. A target-margin price equals direct cost divided by one minus the target margin expressed as a decimal.

Margin is measured against selling price; markup is measured against cost. They are related but not interchangeable. Revenue must be greater than zero. When direct cost is zero, markup is mathematically undefined and the tool says so. A target margin of 100% or more has no finite selling price.

What inputs leave out

Refunds, discounts, shipping, labor, payment fees, overhead, financing and tax are included only when you include them in the relevant input. A calculation can be arithmetically correct and still be unsuitable for a decision if the input scope is incomplete.

Sources

• Shopify Profit Margin Calculator
• Shopify: Markup vs. Margin
• Shopify: Product Pricing
• U.S. Small Business Administration: Break-Even Point
• Investor.gov: Annual Return

Review process

Formula pages are reviewed quarterly and when a referenced source changes. Reviews cover formula transcription, unit consistency, zero and division-by-zero behavior, input labels, assumptions, source availability, disclaimers and accessible result announcements. Last reviewed: August 2026.