Free pricing & profit tool
Margin Calculator: Gross Margin, Profit Margin and Markup vs Margin
To calculate profit margin, subtract cost from revenue, divide the result by revenue, and multiply by 100. If a treatment sells for $500 and costs $200 to deliver, the gross margin is (500 − 200) ÷ 500 × 100 = 60%. Margin is a percent of price, while markup is a percent of cost, so the same sale shows a 150% markup. Use the calculator below for gross margin, net margin or a target price.
Prepared by Prospyr · Reviewed October 3, 2026 · Free, no sign-up, runs in your browser
Gross margin
50%
Profit per item
$32.00
Markup
100%
profit ÷ cost
A math aid. Margins depend on what you count as cost; confirm your figures with your accountant.
Profit margin formulas: gross margin and net margin
- Gross margin % = (revenue − cost of goods sold) ÷ revenue × 100
- Net margin % = (revenue − cost of goods sold − operating expenses) ÷ revenue × 100
- Price for a target margin = cost ÷ (1 − margin ÷ 100)
The IRS describes gross profit as net receipts minus cost of goods sold, taken before business expenses, and suggests dividing it by net receipts to check your figures against your markup policy. Net receipts means gross receipts minus returns and allowances such as refunds. Enter revenue net of refunds in the calculator.
Worked example. A practice has $100,000 of monthly revenue, $18,000 of product and supply cost and $62,000 of operating expenses. Gross profit is $82,000, a gross margin of 82%. Net profit is $20,000, a 20% net margin.
Markup vs margin chart
Both tables are the same relationship read in each direction. Look up the markup you use, or the margin you want.
| Markup | Margin |
|---|---|
| 10% | 9.1% |
| 20% | 16.7% |
| 25% | 20.0% |
| 30% | 23.1% |
| 40% | 28.6% |
| 50% | 33.3% |
| 60% | 37.5% |
| 75% | 42.9% |
| 100% | 50.0% |
| 150% | 60.0% |
| 200% | 66.7% |
| 300% | 75.0% |
| Margin | Markup needed |
|---|---|
| 10% | 11.1% |
| 20% | 25.0% |
| 25% | 33.3% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100.0% |
| 60% | 150.0% |
| 70% | 233.3% |
| 75% | 300.0% |
| 80% | 400.0% |
| 90% | 900.0% |
The markup calculator solves for price, cost or markup directly.
Using margin to price products and services
Margin is the better number for planning because it is a share of what the patient pays, so it adds up with your other percentages: payroll as a percent of revenue, rent as a percent of revenue, card fees as a percent of revenue. If your costs take 40% of the price, a 60% margin is what is left.
Products are easy because the cost is on the invoice. For treatments, include provider time, room time and card fees; the treatment pricing calculator does that and prices to a target margin. To track the result across services, see Prospyr analytics.
Frequently asked questions
How do you calculate gross margin?
Gross margin is (revenue − cost of goods sold) ÷ revenue × 100. With $100,000 in revenue and $18,000 of product and supply cost, the gross profit is $82,000 and the gross margin is 82%. It shows what is left to pay for payroll, rent and everything else.
What is the difference between gross margin and net profit margin?
Gross margin subtracts only the direct cost of what you sold. Net margin subtracts all operating expenses too, such as payroll, rent and marketing. In the default example, $100,000 revenue, $18,000 cost of goods sold and $62,000 operating expenses give an 82% gross margin and a 20% net margin.
What is the difference between markup and margin?
Markup divides profit by cost and margin divides profit by price. A product bought for $40 and sold for $100 has a 150% markup and a 60% margin. Margin is always lower than markup, and they only match at zero.
How do I convert markup to margin?
Margin = markup ÷ (100 + markup). A 50% markup is 50 ÷ 150 = 33.3% margin, and a 100% markup is a 50% margin. To go the other way, markup = margin ÷ (100 − margin), so a 40% margin needs a 66.7% markup.
How do I set a price for a target margin?
Divide your cost by 1 minus the margin as a decimal. For a $32 cost and a 60% margin, the price is 32 ÷ 0.40 = $80. Adding 60% to the cost gives $51.20, which is only a 37.5% margin, and that is the most common pricing mistake.
What is a good profit margin for a med spa?
It depends on the service mix, payroll model and rent, and this page does not publish a benchmark because we have no source for one. Work out your own gross and net margin for each service line and compare month to month. The treatment pricing calculator shows the margin left after product, provider time, room cost and card fees.
Can margin be negative?
Yes. When costs are higher than revenue the profit is negative and so is the margin. Margin can never exceed 100%, because that would take a negative cost.
Sources and scope
- IRS Publication 334 (2025), Tax Guide for Small Business: chapter 7, Figuring Gross Profit
Defines net receipts (gross receipts minus returns and allowances) and gross profit (net receipts minus cost of goods sold), and the gross-profit-over-net-receipts test against markup policy.
Arithmetic only. Margin depends on what you count as cost, so confirm definitions and tax treatment with your accountant. No industry benchmark is claimed.