Business, sales and pricing
Profit margin calculator
The real margin between cost and selling price, with markup alongside for comparison.
Business and SalesResult
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Estimate — not a substitute for professional advice.
How to use
Profit margin shows how much of every unit of revenue is left after the cost is taken out. It is always calculated on the selling price, not on the cost — that is what separates margin from markup, and why two numbers can look right when only one is.
- Check that a price covers the cost and still leaves a profit.
- Compare products with different costs sitting on the same shelf.
- Spot when a card fee or shipping bill eats a margin that looked healthy.
- Enter the total cost: purchase, freight, packaging and anything else that goes into it.
- Enter the selling price the customer actually pays.
- The result gives the profit, the percentage margin and the matching markup.
Formula
Profit = selling price − cost · Margin (%) = (profit ÷ selling price) × 100
Example
Cost of 60 and a selling price of 100 give a profit of 40, a 40% margin and a 66.67% markup. Note which is which: 40% is the margin, 66.67% is the markup.
Limitations
- The calculation uses the cost you provide; allocated fixed expenses have to be part of that number already.
- Sales taxes and fees come out of the price and reduce the real margin, so add them to the cost for a conservative reading.
Frequently asked questions
What is the difference between margin and markup?
Margin divides profit by selling price; markup divides profit by cost. With a cost of 60 and a price of 100, the margin is 40% and the markup is 66.67%.
Can a margin reach 100%?
No. It only approaches 100% as the cost approaches zero. A price equal to the cost gives a zero margin.
Should I price with margin or markup?
To set a price from a target margin, use the selling price calculator: it divides cost by (1 − margin) and lands on the correct price.
Related tools
- Break-even calculatorHow many units cover fixed costs, starting from the contribution margin.
- Percentage increase calculatorApply a percentage to any value and see the increase and the final amount.
- Minimum selling price calculatorThe floor where a sale covers cost and fees with neither profit nor loss.
- Desired margin calculatorThe distance between your current price and the price that delivers the margin you want.
- Net price after fees calculatorWhat to charge so the net amount you need lands in the account, fees included.
- Sales commission calculatorCommission per sale, what stays with the company and the effective rate for the period.