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Profit Margin Calculator

Calculate gross profit margin, markup percentage, revenue, and cost price with clear visual breakdowns.

Runs in your browser. Nothing you add is uploaded.

What the Profit Margin Calculator does

Margin and markup are calculated from the same two numbers and are routinely confused, which is expensive. Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. A 50% markup is a 33.3% margin — mistake one for the other when pricing and you will systematically under-earn. This calculator gives you both, plus the selling price needed to hit a target margin.

How to calculate profit margin

  1. Enter the cost price — what the item cost you, landed.
  2. Enter the selling price, or the margin you want to achieve.
  3. Read gross profit, margin percentage, and markup percentage side by side.
  4. Use the target-margin output to find the price you need to charge.

The Profit Margin Calculator runs entirely in your browser — nothing you enter is uploaded, stored, or logged.

How it works

Gross Profit Margin

Margin % = ((Revenue - Cost) / Revenue) × 100

Margin calculates what fraction of each revenue dollar represents net profit after cost.

Example: Cost = $60, Price = $100 -> Margin = 40%.

When to use it

Pricing a new product

Working from a target margin to a selling price is the correct direction. Starting from cost and applying a markup percentage is where the margin-versus-markup confusion causes underpricing.

Assessing whether a discount is affordable

A 20% discount on a product carrying a 30% margin cuts gross profit by roughly two-thirds. Seeing that before agreeing to the promotion is worthwhile.

Comparing profitability across a range

Absolute profit per unit says little on its own. Margin makes products with different price points directly comparable.

Good to know

  • Margin = (price − cost) ÷ price. Markup = (price − cost) ÷ cost. The denominators differ, and that is the whole distinction.
  • Margin can never reach 100%; markup has no upper limit.
  • To convert markup to margin: margin = markup ÷ (1 + markup). A 60% markup is a 37.5% margin.
  • Gross margin excludes overheads. A healthy gross margin with high fixed costs can still be a loss-making business.

Frequently asked questions

Why is margin always lower than markup?

Margin divides profit by the higher selling price, markup divides profit by the lower cost.

What is the difference between margin and markup?

Both measure the same profit against different bases. Margin divides profit by the selling price; markup divides it by the cost. An item costing 100 and selling for 150 has a 50% markup but a 33.3% margin. Confusing them means pricing lower than intended, which is why the distinction matters commercially rather than just semantically.

How do I find the price for a target margin?

Divide the cost by (1 − target margin). For a 40% margin on a cost of 60: 60 ÷ 0.6 = 100. Adding 40% to the cost gives 84, which yields only a 28.6% margin — a common and costly mistake.

What is a good profit margin?

It is entirely sector-dependent. Grocery retail operates on low single-digit net margins at high volume; software routinely exceeds 80% gross margin. The useful comparison is against your own sector and your own trend over time, not against a universal benchmark.

What is the difference between gross and net margin?

Gross margin counts only the direct cost of goods sold. Net margin subtracts everything else — salaries, rent, marketing, interest, tax. A business can have a strong gross margin and a negative net margin, which is a fixed-cost problem rather than a pricing one.

How much extra volume does a discount need?

More than most people expect. On a 30% margin, a 10% discount cuts profit per unit by a third, so you need volume to rise by about 50% just to break even on the promotion.

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