How to use the profit margin calculator
- Choose what you know: the cost and selling price, or the cost and the margin or markup you want.
- Enter the cost of the product — what you paid to buy or make one unit.
- Enter the selling price or your target percentage. Add the number of units to see total revenue and profit.
Margin vs. markup
Both describe profit as a percentage, but they use a different base. Margin divides profit by the selling price; markup divides profit by the cost. That's why a 50% markup is only a 33.3% margin.
Example
You buy a product for $60 and sell it for $100. Your gross profit is $40, so your margin is 40 ÷ 100 = 40% and your markup is 40 ÷ 60 = 66.67%. To earn a 40% margin on a $60 cost, charge 60 ÷ (1 − 0.40) = $100.
Margin to markup conversion
| Margin | Equivalent markup |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 25% | 33.3% |
| 33.3% | 50% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
Use markup = margin ÷ (1 − margin) and margin = markup ÷ (1 + markup) to convert between them.
What is a good profit margin?
It depends on the industry. Grocery stores often work on gross margins around 25%, while software and online services can exceed 70%. Gross margin only covers the cost of goods — your net margin after rent, wages, marketing and taxes will be lower, so price with all your overheads in mind.
Frequently asked questions
How do I calculate profit margin?
Subtract the cost from the selling price to get gross profit, then divide by the selling price and multiply by 100. Selling for $100 something that cost $60 gives a 40% margin.
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. The same $40 profit on a $60 item sold for $100 is a 40% margin but a 66.67% markup.
How do I price a product for a 30% margin?
Divide the cost by 0.70 (that is, 1 − 0.30). A product that costs $35 should sell for $35 ÷ 0.70 = $50 to make a 30% margin.
Can margin be more than 100%?
No. Margin is profit divided by price, and profit can never exceed the price, so margin is always below 100%. Markup, on the other hand, can be any size — a 200% markup is common for some products.
Is a 50% markup the same as a 50% margin?
No. A 50% markup on a $100 cost gives a $150 price and a 33.3% margin. A 50% margin requires a 100% markup — selling at double the cost.
Results are estimates for educational purposes and are not financial advice. Actual loan terms, rates, taxes and fees vary by lender and location — confirm figures with a qualified professional before making decisions.
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