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Profit Margin Calculator
Work out the margin you are making from cost and price, or the price you need to charge to hit a target margin. Shows the equivalent markup, because they are not the same number.
Also known as: Gross Margin Calculator · Margin Calculator · Net Profit Margin Calculator · Profit Calculator
Profit margin
Margin is profit as a share of the selling price. Solve from a known price, or find the price that hits a target.
What it costs you.
What the customer pays.
Selling price
$100.00
Profit per unit
$40.00
Margin
40%
share of price
Markup
66.67%
share of cost
A 66.67% markup is a 40% margin. If you applied 40% as a markup instead, you would sell at $84.00 and earn $16.00 less per unit.
Markup to margin, side by side
The two numbers people substitute for each other. They only agree at zero.
| Markup | Margin | Multiplier | $60 cost sells at |
|---|---|---|---|
| 10% | 9.09% | 1.1x | $66.00 |
| 15% | 13.04% | 1.15x | $69.00 |
| 20% | 16.67% | 1.2x | $72.00 |
| 25% | 20% | 1.25x | $75.00 |
| 30% | 23.08% | 1.3x | $78.00 |
| 40% | 28.57% | 1.4x | $84.00 |
| 50% | 33.33% | 1.5x | $90.00 |
| 60% | 37.5% | 1.6x | $96.00 |
| 75% | 42.86% | 1.75x | $105.00 |
| 100% | 50% | 2x | $120.00 |
| 150% | 60% | 2.5x | $150.00 |
| 200% | 66.67% | 3x | $180.00 |
| 300% | 75% | 4x | $240.00 |
Reading it the other way: to earn a 50% margin you need a 100% markup, and a 75% margin needs 300%. The formula is markup = margin ÷ (1 − margin). A 40% margin target needs a 66.67% markup.
Margin is a share of price, not of cost
Margin answers: of the money that came in, how much did I keep? It is profit divided by the selling price. Buy for $60, sell for $100, and the $40 profit is a 40% margin because it is 40% of the $100 that reached you.
That denominator is the whole distinction. Markup uses cost instead — the same trade is a 66.7% markup, because $40 is 66.7% of the $60 you spent. Both are correct, they answer different questions, and quoting one when you meant the other is the most common pricing error there is.
Margin is capped at 100% and can never reach it, since that would mean the goods were free. Markup has no ceiling. Any time you see a claimed margin above 100%, someone has computed a markup and called it a margin.
The practical consequence: if you need a 40% margin and you apply a 40% markup, you get a 28.6% margin and quietly lose almost a third of your intended profit on every sale. This calculator always shows both figures side by side so that substitution cannot happen silently.
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Frequently asked questions
What is the formula for profit margin?
Margin = (price − cost) ÷ price × 100. For a $60 cost and $100 price, that is 40 ÷ 100 = 40%. Note the denominator is the price, not the cost.
What is the difference between margin and markup?
Both measure the same profit against different bases. Margin divides by the selling price, markup divides by the cost. A 50% markup is a 33.3% margin. Margin can never exceed 100%; markup can be any size.
What price do I need for a 40% margin?
Divide your cost by 0.60. A $60 cost needs a $100 price. The general form is cost ÷ (1 − margin), which is not the same as adding the margin percentage to the cost.
What is a good profit margin?
It depends entirely on the sector. Grocery retail runs on 1–3% net margins at high volume, while software can exceed 80% gross. Compare against your own industry rather than a universal benchmark, and track the trend more than the absolute figure.
What is the difference between gross and net margin?
Gross margin counts only the direct cost of the goods or service. Net margin subtracts everything else too — overheads, salaries, marketing, tax and interest. This tool calculates gross margin; feed it a fully loaded cost if you want something closer to net.
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