Margin uses selling price as the denominator
Gross margin asks what share of the final selling price remains after the unit cost is removed.
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Calculate gross profit, margin and markup.
Enter cost and selling price to compare gross profit, gross margin and markup. The two percentages use different denominators, which is why they are not interchangeable.
400. Margin is 400 ÷ 1,000 = 40%, while markup is 400 ÷ 600 ≈ 66.67%.A target margin and a target markup are different pricing goals. Saying “add 40%” to cost does not produce a 40% gross margin.
Gross margin asks what share of the final selling price remains after the unit cost is removed.
Markup asks how much higher the selling price is compared with the cost basis.
A positive cost and price are still valid even when price is lower than cost; the resulting gross profit and both percentages become negative.
Shipping, payment fees, labor, overhead and tax are not included unless you already incorporated them into the cost figure.
Related references: SI prefixes & units · Number formats · Cooking measures