What is the difference between markup and margin?

Markup divides profit by cost; margin divides it by price. A 50% markup is a 33.3% margin. Margin is the share of the sale kept, so pricing policy usually states a margin target.

Why divide cost by one minus margin?

Because margin is a share of price, not of cost. Dividing unit cost by one minus the target margin gives the price that leaves that share behind; multiplying cost by one plus margin overshoots the target.

What does the price gap show?

The difference between the quoted price and the target price. A positive gap means the quote is above target; a negative gap is the per-unit raise needed, and the verdict sizes it.

Can the gross margin be negative?

Yes, when the selling price sits below unit cost. The row reports it honestly, and the target price shows what the quote needed to charge to hit the target margin.

Costing calculator

Quote Margin Calculator

Check a quote against your target margin before it goes out. Enter unit cost, selling price, target margin and volume; the rows show markup, the target price, profit and the price gap.

What this calculator does

Quote margin, markup, target price and profit from cost, price and volume, checked against your target margin.

Formula used

Gross margin = (selling price − unit cost) ÷ selling price × 100
Markup = (selling price − unit cost) ÷ unit cost × 100
Price at target margin = unit cost ÷ (1 − target margin ÷ 100)
Gross profit at quote volume = (selling price − unit cost) × quote volume
Price gap to target = selling price − target price; profit at target price = (target price − unit cost) × volume

Inputs explained

Unit Cost: Manufacturing cost per unit from the job cost sheet.
Selling Price: Quoted price per unit before any discount.
Target Margin: Margin share the quote must clear, from pricing policy.
Quote Volume: Units the customer would buy at this price.

How to use the result

Best suited to checking an RFQ before it goes out, sizing the price for a target margin, seeing profit at a volume commitment.
Selling below cost is allowed and shown as a negative margin. Tooling, freight and selling costs belong in unit cost; they are not added here.

Current U.S. benchmarks

U.S. manufacturing runs at 75.7% of capacity (Federal Reserve, Aug 2026). New factory orders are up 8.5% year over year (Census).

Common questions

What is the difference between markup and margin? Markup divides profit by cost; margin divides it by price. A 50% markup is a 33.3% margin. Margin is the share of the sale kept, so pricing policy usually states a margin target.
Why divide cost by one minus margin? Because margin is a share of price, not of cost. Dividing unit cost by one minus the target margin gives the price that leaves that share behind; multiplying cost by one plus margin overshoots the target.
What does the price gap show? The difference between the quoted price and the target price. A positive gap means the quote is above target; a negative gap is the per-unit raise needed, and the verdict sizes it.
Can the gross margin be negative? Yes, when the selling price sits below unit cost. The row reports it honestly, and the target price shows what the quote needed to charge to hit the target margin.

Related guides

Last reviewed 2026-10-01.