Profit Margin Calculator
Calculate gross profit margin, markup, and selling price instantly from cost. Two modes: derive margin from a known price, or find the selling price from a target margin. Runs entirely in your browser.
Enter cost and selling price to see your profit breakdown.
How the Profit Margin Calculator Works
- 1Choose a mode: Cost + Price to calculate margin from known figures, or Cost + Target Margin to find what to charge.
- 2Enter your cost price — the amount you pay to produce or acquire the item.
- 3Enter either the selling price or your desired profit margin percentage.
- 4Hit Calculate — see gross profit, margin %, markup %, and the full revenue breakdown.
Margin vs Markup — Key Difference
Margin and markup are both ratios of profit to a base figure, but the base differs. Margin uses revenue (selling price) as the base; markup usescost. A 50% markup is not a 50% margin — it is a 33.3% margin. Confusing the two is a common pricing mistake that can leave a business under-pricing its products by a significant amount.
Pricing Tips for Better Margins
Know your break-even margin
Calculate the minimum margin that covers all fixed and variable costs before setting prices. Selling below this point generates a loss even with high volume.
Distinguish gross from net margin
Gross margin ignores operating costs. Net margin accounts for rent, salaries, marketing, and taxes. Use gross margin for pricing, net margin for profitability decisions.
Use target-margin mode for new products
When launching a new product, start with the margin you need and let the calculator derive the selling price — rather than guessing a price and hoping the margin is sufficient.
Review margins by product line
Average margins can mask underperforming SKUs. Calculate margin per product and prune or reprice anything dragging down your overall profitability.
Frequently Asked Questions
What is the difference between profit margin and markup?
Profit margin is profit expressed as a percentage of the selling price (revenue). Markup is profit expressed as a percentage of the cost. A product that costs $50 and sells for $80 has a profit of $30, a margin of 37.5% (30/80), and a markup of 60% (30/50).
How is profit margin calculated?
Profit Margin (%) = ((Selling Price − Cost) / Selling Price) × 100. For example, if a product costs $40 and sells for $100, the margin is ((100 − 40) / 100) × 100 = 60%.
How do I calculate the selling price from a target margin?
Selling Price = Cost / (1 − Margin%). If your cost is $50 and you want a 40% margin, the selling price is $50 / (1 − 0.4) = $83.33.
What is a good profit margin?
It depends heavily on the industry. Retail typically operates on 5–20% margins, while software and services can reach 60–80%. What matters is whether your margin covers operating costs and leaves a healthy net profit.
Does this calculator account for taxes or overheads?
No — this tool calculates gross profit margin based on cost and selling price only. To calculate net profit margin you would need to subtract operating expenses, taxes, and other overheads from the gross profit.