Business Tools
Profit Margin Calculator
Calculate profit margin, markup percentage, and total profit based on cost and revenue. Essential for pricing products and business planning.
Use Profit Margin Calculator to get instant results without uploads or sign-ups. Everything runs securely in your browser for fast, reliable output.
Your results will appear here.
About this tool
Every business needs to know its numbers. The Profit Margin Calculator helps you determine the profitability of an item.
It highlights the critical difference between "Margin" and "Markup". Margin is profit as a percentage of revenue. Markup is profit as a percentage of cost. Confusing these two can lead to underpricing your products.
Usage examples
Standard Margin
Cost $50, Sell $100
Margin: 50%, Markup: 100%, Profit: $50
Retail Pricing
Cost $50, Want 20% Margin
Sell Price must be $62.50
How to use
- Enter the "Cost" of the item.
- Enter the "Revenue" (Selling Price).
- Click "Calculate" to see your Margin and Markup.
- Alternatively, enter Cost and desired Margin to find the Revenue needed.
Benefits
- Calculates Margin, Markup, and Profit
- Supports reverse calculation (Goal seek)
- Clear Margin vs Markup comparison
- Works for any currency
FAQs
What is the difference between Margin and Markup?
Margin = (Price - Cost) / Price. Markup = (Price - Cost) / Cost. Margin is always lower than Markup (unless cost is zero).
How do I calculate profit margin?
Profit margin = ((Revenue - Cost) / Revenue) × 100. For example, if you sell for $100 and cost is $70, your margin is 30%.
What is a good profit margin?
It varies by industry. Retail typically sees 2-5%, software 70-90%, restaurants 3-5%. Higher margins generally indicate better profitability.
Can I use this for gross margin calculation?
Yes, enter your revenue (sales price) and cost of goods sold (COGS) to calculate gross profit margin. This shows profitability before operating expenses.
Why is markup higher than margin for the same product?
Markup uses cost as the denominator while margin uses price (which is higher). For example, a $50 item sold for $100 has 100% markup ($50/$50) but only 50% margin ($50/$100). The difference becomes more pronounced with higher margins - always specify which you're discussing to avoid confusion.
How do I price products to achieve a target margin?
To find selling price from cost and desired margin: Price = Cost / (1 - Margin%). For example, if cost is $50 and you want 40% margin: $50 / (1 - 0.40) = $83.33. This ensures your margin goal is met. Never confuse this with markup, which would give you a different (lower) price.
Related tools
View all toolsAppointment Calculator
Calculate appointment scheduling and time slots. Estimate daily appointment capacity and booking optimization.
Business ToolsBarcode Generator
Create barcodes online for free. Generate UPC, EAN, Code 128, QR codes and more. Free barcode maker for products and inventory.
Business ToolsBreak-Even Point Calculator
Calculate break-even point for businesses. Find out how many units you need to sell to cover all costs. Essential for pricing strategy, business planning, and profitability analysis.
Business Tools