Profit Margin Calculator
Margin and markup, side by side, so you never confuse them again.
Calculate profit margin and markup from cost and selling price — or work backward from a target margin to find the price to charge.
Margin and markup formulas
- Profit = selling price − cost
- Margin = profit ÷ selling price × 100
- Markup = profit ÷ cost × 100
- Price for a target margin = cost ÷ (1 − margin ÷ 100)
Examples
| Cost | Price | Profit | Margin | Markup |
|---|---|---|---|---|
| $10 | $20 | $10 | 50% | 100% |
| $40 | $50 | $10 | 20% | 25% |
| $60 | $100 | $40 | 40% | 66.67% |
| $75 | $100 | $25 | 25% | 33.33% |
Margin is always the smaller number, because it divides the same profit by the larger selling price.
Pricing for a target margin
A common mistake is adding the margin percentage to the cost. To earn a 40% margin on a $30 item, the price is 30 ÷ 0.60 = $50, not $42 — a $42 price would only be a 28.6% margin. Other examples: a 25% margin on a $30 cost needs a $40 price, and a 20% margin on an $80 cost needs $100.
Converting markup to margin
| Markup | Equals margin of |
|---|---|
| 25% | 20% |
| 50% | 33.33% |
| 100% | 50% |
Margin = markup ÷ (100 + markup) × 100. Retailers often talk in markup, while accountants and investors usually quote margin, so check which one a supplier or buyer means.
Frequently asked questions
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. The same $50 profit on an item that costs $50 and sells for $100 is a 50% margin but a 100% markup — they're easy to mix up, which is why both are shown together here.
Can I calculate the selling price from a target margin?
Yes — switch to "Cost + target margin" mode, enter your cost and the margin percentage you want, and it works out the price to charge.
What is a good profit margin?
It depends heavily on the industry. Grocery stores often run on low single-digit net margins, while software and consulting businesses can earn far more. Compare your margin with businesses like yours rather than with a single target number.
Is this gross margin or net margin?
It's whichever cost you enter. Using only the product's direct cost gives gross margin. To estimate net margin, include a share of overheads such as rent, wages and fees in the cost.