Profit Margin Calculator
This profit margin calculator finds the profit margin, markup, and gross profit from cost and selling price. Enter the two prices and the profit margin calculator shows margin as a share of the selling price and markup as a share of cost, side by side, so you can price products and check business margin quickly. It works as a simple margin calculator for any product, service, or order.
Results
The Profit Margin Calculator is part of our Business & Pricing collection. Browse more business & pricing to size, convert, and check your work alongside this tool.
What the profit margin calculator shows
Profit margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. They describe the same profit with different bases, so the numbers differ. As a calculator for margin, it answers any product margin or business margin question with margin and profit shown together. The profit margin calculator shows both, plus the gross profit in money, which prevents the common mix-up of pricing with one and reporting with the other.
How to calculate margin
Margin always uses the selling price as the base and can never reach 100 percent; markup uses cost and can be any size.
Profit margin calculator example
A product costs $60 and sells for $100:
The same $40 profit is a 40 percent margin but a 66.67 percent markup.
How to use the gross profit margin calculator
Enter the cost and the selling price. The gross profit margin calculator returns the margin percentage, the markup percentage, and the gross profit. Enter the cost of goods for gross margin; enter the total cost per unit, including overheads, to see the net margin instead.
Reading the gross margin calculator results
Margin shows how much of each sale you keep; markup shows how much you added to cost. A 50 percent markup gives only a 33.3 percent margin. Retail and wholesale often quote markup, while accounts and investors quote margin, so check which one a target refers to.
When to use a margin calculator
- Pricing a new product with the business margin calculator
- Converting a markup target into margin
- Checking gross profit on each sale
- Comparing product margin across a range
Common profit margin calculator mistakes
- Confusing margin with markup. They use different bases.
- Leaving out shipping or fees from cost.
- Expecting a margin above 100%. Margin cannot exceed 100%.
Tips for using the margin calculator
- State clearly whether a target is margin or markup.
- Include all direct costs per unit.
- Recheck margin after discounts.
Gross profit margin vs net margin
Gross profit margin uses only the direct cost of the product, so it shows how profitable each sale is before running costs. Net margin subtracts everything, including rent, wages, and marketing, so it is lower. Both use the same formula; only the cost figure changes. Investors judging money put into a business look at return rather than margin, which the ROI calculator measures.
Figuring profit margin from a target
To set a price for a target margin, divide the cost by (1 − margin). For a 40 percent margin on a $60 cost, the price is 60 ÷ 0.6 = $100.
Margin and markup reference
| Markup | Profit margin |
|---|---|
| 25% | 20.0% |
| 50% | 33.3% |
| 66.67% | 40.0% |
| 100% | 50.0% |
| 150% | 60.0% |
Profit Margin Calculator FAQ
What is the profit margin formula?
Profit margin = (price − cost) ÷ price × 100.
What is the difference between margin and markup?
Margin divides profit by price; markup divides profit by cost.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup is a 33.3% margin.
What is net margin?
Profit after all costs, including overheads, divided by revenue. Enter total cost per unit to see it.