Margin Calculator
This one is built for quick shop math. Your revenue against your cost, and the margin between.
Type two sums and see the percent you keep from each sale.
Add these to see net margin, not just gross.
How to use this tool
- 1Revenue minus cost gives profit.
- 2Profit split by revenue times 100 gives gross margin.
- 3The cost row shows how much of each sale your costs eat.
The math behind it
Selling price = cost / (1 - margin percent)
You want a 40 percent margin on a 60 cost item.
Divide 60 by 0.6 and the price tag should read 100.
Who this tool is for
I watch which tools folk open most, and this one gets used by the same kinds of people again and again. If any of these sound like you, you are in the right place.
- Biz owners watching the health of the whole shop
- Folk comparing gross and net views
- Any one prepping for a bank or investor chat
A pal ran a busy market stall and could not work out why the till was full and the pocket was not. We ran this sum together. Revenue healthy, costs fatter. One rent deal later the margin moved from thin to fine. No more sales. Just honest costs.
Tips from me
- Work backwards from the margin you need, not forwards from a guess.
- Leave room for the costs that arrive late, like fees, shipping and returns.
- Round prices to clean numbers. Customers read them faster and you keep the margin.
Mistakes I see with this sum
These are the three slips I made my self or watch folk make most. Skip them and your number will be closer to the truth on the first try.
- 1Only watching gross margin while other costs quietly grow.
- 2Cutting the wrong costs and hurting the thing customers loved.
- 3Comparing margins across very different trades. Know your norm first.
Two words worth knowing
Gross margin
Sales minus direct costs, as a percent of sales.
Net margin
What is left after every cost, even the quiet ones.
That is the whole page. The tool does the math, and the words above give it a shape. If a number still looks odd, change an input and watch what moves. Playing with the boxes taught me more than any guide did.
Common questions
+Is gross margin the same as net margin?
No. Gross margin looks at direct costs. Net margin also takes away rent, tax and all other costs.
+Can margin be negative?
Yes. If cost is more than revenue you are losing money on each sale. Time to fix price or cost.
+How do I set a price from a target margin?
Split your cost by one minus the margin. The tool runs that sum and shows the tag.
+What is the difference between gross and net margin?
Gross margin only counts the cost of the goods. Net margin counts every cost in the building.
+Why is my margin high but my cash empty?
Margin is a paper number. Slow payments eat cash. Watch both, not one.