Profit Margin Calculator
Enter what an item costs you and what you sell it for. You'll see your profit in dollars, your profit margin and your markup — two numbers that people often mix up.
Profit margin formula
Profit = selling price − cost
Profit margin (%) = profit ÷ selling price × 100
Markup (%) = profit ÷ cost × 100
Example
You buy a product for $60 and sell it for $100. Your profit is $40. The margin is 40 ÷ 100 = 40%, and the markup is 40 ÷ 60 = 66.7%.
Margin vs markup — what's the difference?
Margin compares profit with the selling price; markup compares profit with the cost. The same sale always has a higher markup than margin. Confusing the two is one of the most common pricing mistakes: adding a 40% markup gives only a 28.6% margin.
| Markup | Equals margin |
|---|---|
| 25% | 20% |
| 33.3% | 25% |
| 50% | 33.3% |
| 66.7% | 40% |
| 100% | 50% |
| 150% | 60% |
Gross margin vs net margin
This calculator shows gross margin — price minus the direct cost of the item. Net margin also subtracts overhead such as rent, salaries, software, marketing and taxes, so it is always lower.
Frequently asked questions
How do I calculate profit margin?
Subtract cost from selling price to get profit, then divide profit by the selling price and multiply by 100. ($100 − $60) ÷ $100 = 40%.
What is a good profit margin?
It depends heavily on the industry. Grocery stores may run on low single-digit net margins, while software and services can have much higher margins. Compare yourself with businesses like yours.
Is markup the same as margin?
No. Markup is profit divided by cost; margin is profit divided by price. A 50% markup equals a 33.3% margin.
How do I find the selling price for a target margin?
Price = cost ÷ (1 − margin). For a 40% margin on a $60 cost: $60 ÷ 0.60 = $100. Use our markup calculator for this.