How this calculation works
Margin measures how much of the selling price remains after the entered cost. It differs from markup, which divides profit by cost.
Margin (%) = (selling price − cost) ÷ selling price × 100A worked example
An item costing ₹80 and selling for ₹100 has a 20% gross margin.
Good to know
Uses the stated formula and assumptions. Displayed decimal values are rounded; use consistent units for all inputs.
A 25% markup can be a 20% margin
Buy an item for ₹80 and sell it for ₹100. The ₹20 difference is 25% of the cost but only 20% of the selling price. Markup and margin describe the same rupee difference using different bases.
That distinction matters when setting targets. A selling price obtained by adding 20% to cost does not create a 20% margin. To target a positive margin m expressed as a proportion, the corresponding selling price is cost ÷ (1 − m), before considering other charges.
Gross margin is not automatically net profit
The cost field includes only what you put into it. If delivery, payment fees, returns, rent or salaries are omitted, they are not silently deducted. A positive product margin can coexist with an overall business loss.
Use consistently defined cost and selling price, particularly around tax. Compare products on the same basis and state whether figures are gross or net of amounts that do not belong in revenue or cost.
A few questions, answered
Why is the margin negative?
The entered cost exceeds the selling price, so the item makes a loss under these inputs.
Can a selling price of zero be used?
No. Dividing profit by a zero selling price does not produce a defined margin.