Profit Margin Calculator

Turn a cost and a price into your profit margin, markup, and gross profit, or work backward to the selling price you need to hit a target margin. Works in any currency. Free, no signup.

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$

Currency sets the symbol and formatting; it does not convert at live exchange rates.

$

The margin you want to keep on the price. Must be under 100%. We return the price that hits it.

Gross margin only. This computes margin and markup from the cost and price you enter. It does not include overhead, taxes, fees, or currency conversion, so the result is the ceiling that operating and net margin start from. Confirm against your own accounting before setting prices.

The Profit Margin Calculator turns a cost and a price into the three numbers every seller needs: your profit margin, your markup, and your gross profit in cash. Flip to Sale price mode and it runs the other way, telling you exactly what to charge to hit a target margin, so you never guess at a price again.

How It Works

Your Margin in Three Steps

No account, no email, no limits. Just the margin, the markup, and the profit.

1

Pick a Direction

Choose Margin to go from cost and price to your margin, or Sale price to go from cost and a target margin to the price you should charge.

2

Enter Your Numbers

Type the cost and either the selling price or the margin you want. Add a units count if you want totals, and pick your currency.

3

Read the Result

Get the profit margin, the markup, and the gross profit, with a cost-versus-profit bar, a plain-English verdict, and a shareable link.

The Math

The Margin and Markup Formulas

Three short formulas run the whole calculator. Here they are, with a worked example.

Profit margin

Margin is profit as a share of the price: margin = (price - cost) / price x 100. A 60 cost sold for 100 gives (100 - 60) / 100 = 40%.

Markup

Markup is the same profit as a share of the cost: markup = (price - cost) / cost x 100. The same 60 and 100 give (100 - 60) / 60 = 66.67%. Same profit, bigger number, because the base is smaller.

Selling price from a target margin

To hit a margin you divide, you do not multiply: price = cost / (1 - margin/100). For a 40% margin on a 60 cost, 60 / (1 - 0.40) = 60 / 0.60 = 100. Gross profit is just price - cost, in cash.

Worked example

Cost 60, price 100, one unit: gross profit is 40, the profit margin is 40%, and the markup is 66.67%. Sell 250 units and the margin and markup do not change, but total gross profit becomes 40 x 250 = 10,000.

The Big Confusion

Margin Is Not Markup

They describe the same profit but divide by different things, and mixing them up quietly costs you money.

A margin divides profit by the price; a markup divides the same profit by the cost. Because the cost is the smaller number, markup is always the larger percentage. The classic mistake is to want a 40% margin and then multiply cost by 1.40, which only produces a 40% markup, a 28.57% margin. You earned less than you planned on every sale.

Use this quick reference to convert at a glance. The formula is margin = markup / (100 + markup):

If your markup isyour margin is
5%4.76%
10%9.09%
15%13.04%
20%16.67%
25%20%
30%23.08%
40%28.57%
50%33.33%
75%42.86%
100%50%
150%60%
200%66.67%

Two anchors worth memorizing: a 50% markup is a 33.33% margin, and a 100% markup (doubling the price) is a 50% margin.

Which Margin

Gross, Operating, and Net Margin

This tool gives you gross margin. Here is how the other two narrow it down.

Gross margin

Revenue minus the direct cost of the product (cost of goods sold), as a share of revenue. It is what this calculator returns and the widest of the three.

Operating margin

Gross profit minus the costs of running the business, like rent, salaries, software, and marketing. It shows whether the core operation makes money before financing and tax.

Net margin

What is left after every cost, including interest and taxes, as a share of revenue. It is the true bottom line. Think of gross margin as the ceiling, with overhead, interest, and tax stepping it down to net.

Margin by the Numbers

Markups and the Margins They Make

Each figure below is an arithmetic identity, not a survey, so it is always exactly true.

16.7%
the margin you actually keep from a 20% markup
Arithmetic
33.3%
the margin from a 50% markup; a popular target that is smaller than it looks
Arithmetic
50%
the margin when you double the price, that is a 100% markup
Arithmetic
<100%
the ceiling for gross margin; markup, by contrast, has no upper limit
Definition

Why It Matters

Margins Decide Whether You Last

Price is the fastest lever in any business, and margin is how you pull it without guessing.

Set the right price

Pricing to a target margin protects profit on every unit. Pricing to a markup you confused with margin leaves money on the table all day.

Track profitability

Margin tells you how much of each sale you actually keep, so you can spot creeping costs or discounts before they erase your profit.

Compare products fairly

Two products with very different prices can be compared cleanly by margin, since it normalizes profit to a percentage of revenue.

Avoid the markup trap

Seeing margin and markup side by side stops the single most common pricing error, treating a markup percentage as if it were the margin.

Common Mistakes

Where Margins Go Wrong

Five mistakes that quietly shrink profit, and how to avoid each one.

  1. Marking up by the target margin. Multiplying cost by 1 plus your margin gives a markup, not a margin. Divide by (1 minus margin) instead, or just use Sale price mode.
  2. Comparing a markup to a margin. A 50% markup looks bigger than a 40% margin but is the weaker number. Convert before you compare.
  3. Leaving costs out of cost. Forgetting shipping, duties, fees, or packaging inflates your margin on paper and hides a thin real one.
  4. Treating gross margin as profit. Gross margin ignores rent, salaries, and tax. A healthy gross margin can still end in a net loss.
  5. Discounting without checking margin. A 20% discount on a 40% margin wipes out half your profit. Always re-run the margin before you mark something down.

Methodology

How This Calculator Works

Plain, standard formulas; nothing hidden.

Margin mode computes profit = price - cost, then margin = profit / price and markup = profit / cost. Sale price mode computes price = cost / (1 - margin/100), then the same profit and markup. Percentages are rounded to two decimals; money is formatted in your chosen currency. The units field multiplies the per-unit revenue, cost, and profit to give totals; the percentages are ratios and stay the same at any volume. A price below cost produces a negative margin, which the tool flags as a loss. Everything runs in your browser; nothing is sent to a server.

References

Sources & Further Reading

Standard references for margin, markup, and pricing.

Gross profit margin, definition and formula: Investopedia.
Margin vs markup, with conversion tables: Corporate Finance Institute.
Pricing and margin for retailers: Shopify, profit margin guide.
Gross and net margins by industry sector: NYU Stern (Damodaran), margins-by-sector dataset.

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FAQ

Frequently Asked Questions

Margin, markup, pricing, and the differences that trip people up, in plain English.

Profit margin is the share of your selling price that you keep as profit. Gross profit margin = (price - cost) / price, expressed as a percent. If an item costs 60 and sells for 100, the 40 of profit is 40% of the 100 price, so the margin is 40%. Margin is always measured against revenue (the price), which is what makes it different from markup.
Subtract cost from price to get profit, then divide by the price: margin = (price - cost) / price x 100. For a 100 price and a 60 cost, that is (100 - 60) / 100 = 0.40 = 40%. This tool does it instantly and also shows the equivalent markup and the gross profit in dollars (or any currency you pick).
They use the same profit but a different base. Margin divides profit by the price (revenue); markup divides the same profit by the cost. A 60 cost sold at 100 is a 40% margin but a 66.67% markup. Markup is always the larger number for any profitable sale, which is why confusing the two leads to underpricing.
Margin = markup / (100 + markup) x 100, and markup = margin / (100 - margin) x 100. So a 50% markup equals a 33.33% margin, and a 50% margin equals a 100% markup. The Margin mode shows both numbers at once so you never have to convert by hand.
Divide the cost by one minus the target margin: price = cost / (1 - margin/100). To hit a 40% margin on a 60 cost, price = 60 / (1 - 0.40) = 60 / 0.60 = 100. Use the Sale price mode: enter the cost and the margin you want and it returns the price, the profit, and the implied markup.
There is no single good number; it depends heavily on the industry. Software and digital products often run very high gross margins, while grocery and high-volume retail run thin ones, and many businesses sit in between. For sector benchmarks, NYU Stern's Damodaran margins-by-sector dataset is a widely used free reference. Compare against businesses like yours, not a universal target.
Gross margin counts only the direct cost of the product (cost of goods sold). Operating margin also subtracts running costs like rent, salaries, and marketing. Net margin subtracts everything, including interest and taxes, so it is the bottom-line profit as a share of revenue. This calculator computes gross margin from the cost you enter; treat the result as the ceiling that overhead then eats into.
Gross profit is the money left after subtracting the cost of the goods from the revenue: gross profit = price - cost. It is a dollar amount, not a percent. Profit margin is that same gross profit expressed as a percentage of the price.
No. Because margin is profit divided by the price, and profit can never exceed the price, gross margin tops out just below 100% (you would need a cost of zero to reach 100%). Markup, by contrast, has no ceiling: a 5 cost sold for 100 is a 1,900% markup but still only a 95% margin.
Because they share the same profit but divide by different numbers. Markup divides by the smaller number (cost), so it is always larger than the margin, which divides by the larger number (price). The gap widens as profit grows: a 100% markup is only a 50% margin.
No, and this is the most common pricing mistake. If you want a 40% margin, multiplying cost by 1.40 gives a 40% markup, which is only a 28.57% margin. To get a 40% margin you must divide by 0.60, not multiply by 1.40. The Sale price mode does this correctly for you.
Margin and markup are the same whether you sell one unit or one thousand, because they are ratios. Enter a Units value and the calculator multiplies the per-unit profit, revenue, and cost to show your totals, while the margin and markup percentages stay constant.
For gross margin, use the cost of goods sold: what it costs you to make or buy the item, including materials, direct labor, and inbound shipping or import duties. Leave out overhead like rent, salaries, and marketing; those reduce operating and net margin, not gross margin. Be consistent so your margins are comparable over time.
Yes. Pick a currency from the selector and every money figure reformats to that symbol and number style (USD, EUR, GBP, CAD, AUD, INR). It changes formatting only; it does not convert your figures at live exchange rates, so enter all values in one currency.
A negative margin means you are selling below cost and losing money on each sale. If a 100 item sells for 80, the profit is -20 and the margin is -25%. The calculator flags this so you can raise the price or cut the cost before the loss compounds across units.
Not quite. Profit margin measures profit against revenue (price). ROI measures profit against the money invested, and markup measures profit against cost. They can all describe the same sale yet give different percentages, so always check which base a number uses before comparing.

Glossary

Margin Terms, in Plain English

The concepts behind the calculator and what each one means.

Profit margin
The share of the selling price kept as profit: (price - cost) / price, shown as a percent. Also called gross profit margin.
Markup
Profit measured against cost: (price - cost) / cost, as a percent. Always larger than the margin for a profitable sale.
Gross profit
The dollar amount left after subtracting the cost of goods from revenue: price - cost. Margin is this figure as a percent of price.
Cost of goods sold (COGS)
The direct cost to produce or buy what you sell: materials, direct labor, and inbound freight. The cost used for gross margin.
Revenue
The money taken in from a sale before any costs are subtracted; for a single item it is the selling price.
Selling price
The amount the customer pays for one unit. Margin and markup are both measured from this and the cost.
Cost price
What one unit costs you. Dividing profit by the cost price gives the markup.
Operating margin
Operating profit as a share of revenue, after subtracting both COGS and running costs like rent, salaries, and marketing.
Net profit margin
The bottom line: net profit as a share of revenue, after every cost including interest and taxes.
Net profit
What remains after all costs, including overhead, interest, and taxes, are subtracted from revenue.
Contribution margin
Revenue minus the variable costs of a product; what each sale contributes toward fixed costs and profit.
Break-even point
The sales volume at which total revenue equals total cost, so profit is zero; fixed costs divided by the per-unit contribution.
ROI (return on investment)
Profit measured against the money invested, not against price or cost. A different ratio from margin and markup.
Margin vs markup
Two ways to express the same profit: margin divides by price, markup divides by cost. Mixing them up causes underpricing.
Loss
A sale below cost, where profit is negative and the margin is below zero; the price does not cover what the item cost you.

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