Profit Margin Calculator
Work out the profit on any product or service. Enter what it costs you and what you sell it for to see the profit, your gross margin percentage and the markup percentage side by side.
How to calculate profit margin
- Enter your cost (what the item or service costs you).
- Enter the selling price you charge the customer.
- Read off the profit, margin percentage and markup percentage.
Examples
Cost 40, price 100
cost = 40, price = 100
profit = 60, margin = 60%, markup = 150%
Frequently asked questions
What is the difference between margin and markup?
Both measure the same profit but against a different base. Margin is profit divided by the selling price, so it is the share of revenue you keep. Markup is profit divided by the cost, so it is how much you added on top of cost. The same deal always shows a higher markup than margin.
How do I price for a target margin?
Divide your cost by (1 minus the margin as a decimal). For a 40 percent margin on a cost of 60, the price is 60 / (1 - 0.40) = 100. Setting the price by adding 40 percent to cost would instead give a markup of 40 percent and a smaller margin.
What is the difference between gross margin and net margin?
This tool calculates gross margin, which uses only the direct cost of the product. Net margin goes further and subtracts every other expense, such as rent, salaries, marketing and tax, from revenue. Net margin is always lower than gross margin.
Why can a margin never reach 100 percent?
Margin is profit divided by price, and profit can at most equal the price, which only happens when the cost is zero. As long as the item costs you something, part of the price covers that cost, so the margin stays below 100 percent. Markup has no such ceiling.
What happens if the price is below the cost?
The profit is negative, which means you are selling at a loss. The margin and markup percentages also turn negative to reflect that. Raise the price or lower the cost to get back into profit.
Is my data sent anywhere?
No. The calculation runs entirely in your browser, so the numbers you type never leave your device.
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