Profit Margin Calculator
Profit margin is profit as a percentage of the selling price. Markup is profit as a percentage of cost. Enter both figures to see each one.
Enter your figures below. Results update as you type.
Gross margin40%
- Cost 60%
- Profit 40%
- Profit
- $40.00
- Markup
- 66.67%
How the Margin calculation works
Margin = (price - cost) / price x 100; markup = (price - cost) / cost x 100
The two are often confused. An item that costs $60 and sells for $100 has a 40% margin and a 66.7% markup. Margin can never exceed 100%; markup can.
Frequently asked questions
How do I price for a target margin?
Divide cost by (1 - target margin). For a 40% margin on a $60 cost: 60 / 0.6 = $100.
How do I calculate profit margin?
Subtract the cost from the selling price, divide by the selling price and multiply by 100. An item that costs $60 and sells for $100 has a 40% margin.
What is the difference between margin and markup?
Both describe the same profit, measured against different things. Margin is profit as a share of the selling price; markup is profit as a share of the cost. A $60 cost and a $100 price is a 40% margin and a 66.7% markup.
What is a good profit margin?
It varies widely by industry. As a broad rule of thumb, a net profit margin of about 10% is considered healthy, 20% high and 5% low. Grocery stores run on far thinner margins than software companies.
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