Here is a gross margin and markup calculator to help print resellers quickly figure retail pricing and profit. Aside from calculating your retail price, you can use it to calculate various "what if" scenarios regarding margins/markup, sales price, and profit.
To use the margin/markup calculator:
1 - Enter Cost of Goods.
2 - Then enter Gross Margin OR Markup. The remaining fields will automatically calculate.
You can adjust Gross Margin or Markup to see how that changes your Revenue and Profit. Some people prefer to calculate using Gross margin while others prefer Markup. You can use either one in this calculator.
If you have a problem entering new numbers, just hit the Clear All Fields button.
Scroll below the calculator for more on the subject of calculating profit margins and markups.
Margin and Markup Calculator Formulas
Here are the formulas used in our margin, markup and pricing calculator.
Gross Margin = 100 × profit / revenue
Profit = revenue - costs of goods
Revenue (Selling Price) = Cost of Goods + Profit
Markup Percentage = [(Selling Price − Cost) / Cost] × 100
Gross Margin and Markup are expressed as percentages.
Cost of Goods, Revenue, and Profit are expressed in dollars.
Calculator Terminology
Cost of Goods
Cost of Goods refers to the direct costs of producing the product or service being sold. It's commonly referred to as Cost of Goods Sold (COGS). For manufacturing companies, COGS includes the costs of materials, labor, and overhead used in production. For retail businesses, it primarily consists of the purchase price of goods acquired for resale, plus any additional costs necessary to make the goods ready for sale.
COGS can mean slightly different things in different companies, so use it in the pricing calculator in a way that aligns with your accounting practices.
Margin versus Markup
Margin is the ratio of profit compared to the selling price. Markup is the ratio of profit compared to the purchase price.
Some print resellers prefer using markup while others prefer using margin. Margin is the measure used in accounting and financial statements, so in that sense it's probably more important. For practical purposes, either method works.
Revenue
Revenue (retail selling price) is the Cost of Goods plus Profit.
Gross Margin
Gross margin, also known as gross profit margin, is a key financial metric that measures a company's profitability by calculating the percentage of revenue that exceeds the cost of goods sold (COGS). It represents the proportion of each dollar of revenue that the company retains as gross profit after accounting for the direct costs associated with producing the goods or services sold.
As we all know, gross margin is an important indicator of a company's financial health and operational efficiency. It shows how effectively a company can generate profit from its core business activities, before accounting for other expenses such as operating costs, taxes, and interest. A higher gross margin generally indicates that a company is more efficient in converting sales into profit, while a lower gross margin might suggest higher production costs or pricing pressures.
