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Profit Margin Calculator

Profit margin is the share of the selling price that is profit. Enter cost and selling price to get margin, markup and profit together — or enter a cost and a target margin to find the price to charge, or a price and margin to find the most you can afford to pay.

Quick examples
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Profit margin40%

Profit ÷ selling price

Markup
66.67%
Profit
$40.00
Selling price
$100.00
Cost
$60.00
What the selling price is made of
  • Cost
  • Profit

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      Formula

      Profit = selling price − cost
      Margin % = profit ÷ selling price × 100
      Markup % = profit ÷ cost × 100
      Price for a target margin = cost ÷ (1 − margin ÷ 100)
      Cost for a target margin = selling price × (1 − margin ÷ 100)

      How to use it

      1. Choose which two numbers you already know.
      2. Enter them. Cost should include everything it takes to get the item ready to sell.
      3. Read the margin, and compare it with the markup shown next to it — they are not the same number.
      4. Use the bar to see how the selling price divides into cost and profit.

      Worked examples

      An item that costs $60 and sells for $100

      Profit
      $40.00
      Profit margin
      40%
      Markup
      66.67%

      The price that gives a 30% margin on a $50 cost

      Selling price
      $71.43
      Profit
      $21.43
      Profit margin
      30%
      Markup
      42.86%

      The most you can pay for an item you sell at $80 and still keep a 25% margin

      Cost
      $60.00
      Profit
      $20.00
      Markup
      33.33%

      Margin is not markup

      Both describe the same profit, but against different bases. Margin divides profit by the selling price; markup divides it by the cost. Sell a $60 item for $100 and the $40 profit is a 40% margin but a 66.67% markup.

      The classic mistake is adding your target margin to cost as if it were a markup. Adding 40% to a $60 cost gives $84, which is only a 28.57% margin. To really keep 40% of the price you must charge $60 ÷ 0.60 = $100.

      Margin can never reach 100% (that would mean the item cost nothing), while markup has no upper limit.

      Margin and markup side by side

      A 20% margin is a 25% markup. 25% margin is 33.33% markup. 33.33% margin is 50% markup. 40% margin is 66.67% markup. 50% margin is 100% markup. 60% margin is 150% markup. 75% margin is 300% markup.

      To convert: markup = margin ÷ (1 − margin), and margin = markup ÷ (1 + markup), with both written as decimals.

      Gross, operating and net margin

      This calculator works on one item or one sale, which is a gross margin: price against the direct cost of the goods. Operating margin also subtracts overheads such as rent and salaries, and net margin subtracts everything including tax. A healthy gross margin can still leave a thin net margin once overheads are paid.

      Questions people ask

      What is the difference between margin and markup?

      Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. An item that costs $50 and sells for $75 has a $25 profit: a 33.33% margin and a 50% markup.

      How do I price for a 30% margin?

      Divide the cost by 0.70. A $50 cost needs a price of $71.43. Multiplying the cost by 1.30 gives $65, which is only a 23.08% margin.

      What is the profit margin if I buy for $40 and sell for $100?

      60%. The profit is $60, and $60 ÷ $100 = 0.60. The markup on the same sale is 150%.

      What is a good profit margin?

      It depends heavily on the industry. Grocery retail runs on gross margins of roughly 25–30%, clothing around 50%, software often above 70%. Compare yourself with businesses that sell what you sell.

      Related calculators

      Markup CalculatorSelling price from cost and markup, with the margin it really gives.Profit CalculatorGross, operating and net profit with all three margins.Wholesale Price CalculatorWholesale and retail prices from your cost, with both margins.Break-Even CalculatorUnits and revenue needed to cover your costs.Discount CalculatorSale price and savings, with a stacked second discount and tax.