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Profit Margin Calculator.

Turn cost and price into margin, markup, and gross profit — or set a target margin and get the price.

You are selling below cost — every unit loses money. The margin and markup figures below are negative for that reason.

Gross profit

price − cost

Profit margin

profit ÷ price

Markup

profit ÷ cost

The difference

Adding your target percentage to cost is not the same as earning it as a margin. On a cost of , a markup leaves you short of the price you would need for a margin.

Runs entirely in your browser. The values you enter never leave your device — there is no request to our server and nothing is stored. How we handle data

Margin, Markup, and Price

Margin and markup describe the same profit from two different reference points. Margin asks what share of the money coming in you keep; markup asks how much you added on top of what you paid. Neither is more correct — but mixing them up costs real money.

Formulas

Gross profit = Price − Cost
Margin % = (Price − Cost) ÷ Price × 100
Markup % = (Price − Cost) ÷ Cost × 100
Price from margin = Cost ÷ (1 − margin)
Margin from markup = markup ÷ (100 + markup)

Because price is always larger than cost for a profitable item, markup is always the larger of the two percentages. A 100% markup is a 50% margin; a 50% markup is a 33.3% margin; a 25% markup is a 20% margin. Anyone quoting a percentage without saying which they mean is worth asking.

The Expensive Mistake

The most common pricing error in small business is adding the target margin percentage to cost. It feels right and it always undershoots.

Wanting 30% margin, adding 30% to cost

An item costing 70 priced at 91 yields a margin of 23.1%, not 30%. The correct price is 70 ÷ 0.70 = 100. On a 30% target you have given away nearly a quarter of the intended profit.

Discounting without checking the remaining margin

A 20% discount on a product carrying a 30% margin does not leave 10% — it leaves 12.5% of the new lower price, and the profit per unit falls by two thirds. Always recalculate the margin on the discounted price.

Forgetting the variable costs of selling

Payment processing, marketplace commission, shipping, and returns all sit between the price and the profit. Include them in cost, or the margin shown here will be higher than the money you actually keep.

Gross Margin Is Not Net Margin

This calculator works at the unit level, on the cost of the goods themselves. That is gross margin: what each sale contributes before any of the costs of running the business are paid.

Net margin subtracts everything else — rent, salaries, software, marketing, interest, and tax — and is calculated over a period rather than per unit. A business with a healthy 45% gross margin can still lose money if its fixed costs are too high for its sales volume, which is the point at which break-even analysis becomes the more useful tool.

Knowledge Base

Margin and Markup Pricing Methodology.

Every pricing decision comes down to two numbers: what an item costs you and what someone will pay for it. Margin and markup are two ways of expressing the gap between them, and knowing which one a supplier, a spreadsheet, or a colleague means is the difference between the profit you planned and the profit you get.

The Calculation Branch

Gross profit = Price − Cost | Margin % = profit ÷ price × 100 | Markup % = profit ÷ cost × 100 | Price = Cost ÷ (1 − target margin) | Price = Cost × (1 + target markup) | Margin = markup ÷ (100 + markup)

Industrial Standards.

Margin is calculated against the selling price and markup against the cost, following standard accounting definitions. Target margin is capped just below 100 percent because a 100 percent margin implies a zero cost and an infinite price. All figures are gross — they reflect only the direct cost entered and exclude overheads, tax, and any selling fees not included in that cost.

In-Depth Analysis & Reference Data

Retail and wholesale frequently talk past each other for this reason. A distributor quoting keystone pricing means doubling the cost, a 100% markup, which the retailer books as a 50% margin. Both describe the same transaction, and a plan built on one number while measuring the other will consistently miss target.

Margin also sets the sales volume you need after a discount. If the margin is 40% and you cut the price by 10%, you keep only 33% of the new price, and you now need roughly 33% more unit sales to earn the same gross profit. Modelling that volume requirement before running a promotion is usually more informative than modelling the discount itself.

Registry Questions & FAQ.

Can margin ever exceed 100 percent?

No. Margin is a share of the selling price, so it approaches 100 percent only as cost approaches zero and can never exceed it. Markup has no upper limit — a product costing 1 and selling for 100 carries a 9,900 percent markup and a 99 percent margin.

Which should I use for pricing?

Set prices from margin, since it maps directly onto the profit line in your accounts, and use markup only when a supplier or an industry convention states it that way. Whichever you choose, use the same one everywhere.

All metrics verified against ISO/ASTM benchmarks.