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.

Result

Gross margin40%

What the selling price is made of
  • 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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