Profit Margin Calculator

Enter your cost and selling price to get the three numbers every business decision needs: profit, margin (profit as % of revenue) and markup (profit as % of cost). They're different — and confusing them destroys pricing.

How to use this calculator

Enter the cost price — everything it takes to produce or buy one unit.
Enter the selling price.
Press Calculate to see profit, margin and markup side by side.
Pricing tip: to hit a target margin, price = cost ÷ (1 − margin%), not cost × (1 + margin%).

Formula used

Margin = (Price − Cost) ÷ Price × 100 · Markup = (Price − Cost) ÷ Cost × 100

Same profit, different base: margin divides by the selling price, markup by the cost. A 100% markup equals only a 50% margin. To price for a target margin: Price = Cost ÷ (1 − margin).

Example calculation

Worked example

Cost 600, selling at 1,000:

Profit = 400. Margin = 400 ÷ 1,000 = 40%. Markup = 400 ÷ 600 = 66.7%. To achieve a 50% margin on this cost, you'd price at 600 ÷ 0.5 = 1,200.

Margin vs markup — the costly confusion

Margin answers "what share of my revenue is profit?" — the language of financial statements. Markup answers "how much did I add on top of cost?" — the language of pricing. Both describe the same profit from different angles, and mixing them up systematically underprices products: applying a "30% margin" as a 30% markup yields only a 23% margin.

Gross margin covers direct costs only; after operating expenses you get operating margin, and after everything, net margin — each a progressively tougher test of the business.

Why use this calculator?

Price products correctly for a target margin instead of accidentally underpricing.
Translate between margin (accounting) and markup (pricing) instantly.
Spot below-cost sales and thin margins before they compound.

Frequently asked questions

What's the difference between margin and markup?

Margin is profit ÷ selling price; markup is profit ÷ cost. A product costing 50 sold at 100 has a 50% margin but a 100% markup. Markup is always the bigger number for the same profit.

How do I price for a 40% margin?

Divide cost by (1 − 0.40): a 600 cost needs a price of 1,000. Multiplying cost by 1.40 instead gives 840 — only a 28.6% margin, the classic error.

What is a good profit margin?

Wildly industry-dependent: groceries run 1–3% net, restaurants 5–10%, software 20–30%+. Compare against your industry's norms, and watch the trend in your own margin more than any absolute benchmark.