Profit Margin Calculator
Calculate profit margin, markup percentage, and gross profit from cost and selling price with this profit margin calculator.
About Profit Margin Calculator
Understanding the difference between profit margin and markup is one of the most important parts of pricing products or services. This calculator handles both directions - enter cost and selling price to find your margins, or enter revenue and a target margin to find the cost you need to hit.
Margin vs Markup Explained
Profit margin measures what percentage of your revenue is actual profit: (Revenue - Cost) / Revenue x 100. Markup measures how much you added on top of cost: (Revenue - Cost) / Cost x 100. They describe the same relationship from different angles. A product with a 50% margin has a 100% markup, meaning you doubled the cost to set the price.
Two Calculation Modes
The default mode takes your cost price and selling price and shows the resulting margin, markup, and gross profit. Switch to the second mode if you already know your target margin and revenue - the calculator will work backwards to tell you the maximum cost you can afford. This is handy when negotiating with suppliers or setting budget constraints.
Reference Table
The built-in margin-to-markup equivalents table shows common values side by side, so you can quickly translate between the two. Your current result is highlighted in the table for easy comparison. For related calculations, try the ROI Calculator to measure return on your investments, or the Percentage Calculator for general percentage math.
Frequently Asked Questions
What is the difference between margin and markup?
Margin is the percentage of the selling price that is profit, while markup is the percentage added on top of the cost. A 50% margin means half the selling price is profit. A 50% markup means you added half the cost on top. A 50% margin equals a 100% markup.
How do I calculate profit margin from cost and selling price?
Subtract the cost from the selling price to get gross profit, then divide gross profit by the selling price and multiply by 100. For example, if cost is $60 and selling price is $100, margin is ($100 - $60) / $100 x 100 = 40%.
What is a good profit margin for a small business?
It varies by industry. Retail businesses often see 5-10% net margins, while software and services can hit 20-40%. Gross margins are higher since they only account for direct costs. Check industry benchmarks to see where you stand.
Can margin ever be higher than markup?
No. Margin is always lower than or equal to markup for positive values. They only match at 0%. As margin grows, markup grows faster because markup is calculated on the smaller cost base rather than the larger revenue figure.
How do I find cost from revenue and margin?
Multiply the revenue by (1 - margin / 100). For example, if revenue is $1,000 and margin is 30%, cost is $1,000 x 0.70 = $700. Use the reverse mode in this calculator to do it automatically.