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Profit Margin Calculator
Calculate profit margin vs markup — understand the difference and optimise your pricing.
Enter your numbers and click Calculate to see margin, markup, and profit.
Results are informational. Calculation is based on your input and public rules, official accounting may differ. For accuracy, confirm the final result if needed from the appropriate official source or specialist.
How it works?
Gross profit margin is the percentage of revenue left after subtracting the direct cost of goods or services. Formula: Margin = (Revenue − Cost) / Revenue × 100.
Markup is the percentage added on top of cost: Markup = (Revenue − Cost) / Cost × 100. Markup is always higher than the equivalent margin — a 40% margin equals a 66.7% markup.
Use the three tabs to work in any direction: calculate your current margin from known revenue and cost, find the right selling price for a target margin, or determine the maximum cost you can afford at a given price and margin target.
Frequently asked questions
What is the difference between margin and markup?
Both measure the same gross profit but from different angles. Margin is profit as a percentage of revenue; markup is profit as a percentage of cost. A product that costs $60 and sells for $100 has a 40% margin but a 66.7% markup. Confusing the two can lead to serious pricing mistakes — for example, a 50% markup only yields a 33% margin, not 50%.
What is a good profit margin?
It depends heavily on industry. Grocery retail often operates at 1–3% net margin, while software companies can exceed 70%. As a rough guide: below 5% is tight and vulnerable to cost increases; 10–20% is healthy for most product businesses; above 30% is strong and gives room for reinvestment. Always compare against your industry benchmark rather than an absolute number.
Why is markup always higher than margin at the same profit?
Because markup divides by the smaller number (cost) and margin divides by the larger number (revenue). For a $40 profit on a $100 sale with $60 cost: margin = 40/100 = 40%, markup = 40/60 = 66.7%. The higher the margin, the bigger the gap. At a 50% margin, the markup is 100% — you are doubling the cost.
How do I use the 'Find Price' tab?
Enter your cost and the margin percentage you want to achieve. The calculator solves the formula Price = Cost / (1 − Margin%) for you. For example, a cost of $60 with a 40% margin target gives a selling price of $60 / 0.60 = $100. This is the minimum price you must charge to hit your target margin.
What counts as 'cost' in this calculator?
This calculator computes gross profit margin — the profit after direct costs (cost of goods sold / cost of services). It does not include operating expenses, salaries, rent, taxes, or other overheads. To calculate net profit margin, subtract all operating expenses from revenue before entering the cost figure.