Profit Margin Calculator
Calculate gross profit margin, net margin, markup percentage, and revenue from cost and selling price.
About Profit Margin Calculator
Enter cost and selling price to instantly calculate gross profit, margin percentage, and markup. Or enter a target margin to find the right price.
About this calculator
The Profit Margin Calculator shows how much of every sale you keep. Enter the cost of a product and its selling price and it returns gross profit, gross margin and markup. Enter a target margin instead and it returns the price you need to charge.
Use it to test a price before you print the tag, to compare products, or to see how much room you have for discounts. All amounts are in dollars, but the formulas are the same for any currency.
How to use it
- Enter the Cost and the Selling Price. The profit, margin and markup appear.
- Or enter the Cost and your Target Margin and press Get Price to find the selling price.
Margin formulas
Markup % = (Price − Cost) ÷ Cost × 100 and Margin % = (Price − Cost) ÷ Price × 100. Convert: Margin = Markup ÷ (100 + Markup) × 100 and Markup = Margin ÷ (100 − Margin) × 100. To price from cost and margin: Price = Cost ÷ (1 − Margin). To price from cost and markup: Price = Cost × (1 + Markup).
Worked example
Cost $60, selling price $100
| Gross profit | $40.00 |
| Gross margin | 40.0% |
| Markup | 66.7% |
To earn the same 40% margin on a $90 cost, the price has to be $150, since $90 ÷ 0.6 = $150.
Tips and common mistakes
- Markup is on cost, margin is on price. A 50% markup is a 33.3% margin, never 50%.
- If you want a 40% margin, a 40% markup gives you only 28.6%. Use cost ÷ (1 − 0.40) instead.
- Margin is the number that matters for profit. It is the share of every rupee of sales you keep before overheads.
- Do not forget GST. Work out margin on the price excluding tax.
- Discounts hit margin hard. A 10% discount on a 30% margin removes a third of the profit.
Frequently asked questions
How do I calculate profit margin?
Subtract the cost from the price, divide by the price and multiply by 100.
What is gross margin versus net margin?
Gross margin ignores overheads. Net margin subtracts all costs including rent, salaries and tax.
What is the markup on a 40% margin?
66.7%. Markup is always larger than margin.
How do I find the price for a target margin?
Divide cost by 1 minus the margin.
What is a good margin?
It depends on the industry. Software can exceed 70%, grocery retail is often under 10%.
Can the margin be negative?
Yes, when the price is below the cost.