Profit Margin Calculator

Calculate profit amount, profit margin %, and markup % from any cost and selling price. Or work backwards — find the selling price that hits your target margin, or the maximum cost you can afford. Instant results for any product, service, or business.

Profit Breakdown

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Profit per Unit
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Profit Margin
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Markup
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Selling Price
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Cost Price
Calculation Summary
Cost vs Profit Breakdown

About This Calculator

What it calculates
Profit amount, profit margin %, and markup % from cost and selling price; or selling price from target margin/markup; or cost from selling price and target margin.
Inputs
Cost price, selling price (or target margin / markup % depending on mode). Optional: quantity for total profit.
Outputs
Profit per unit, profit margin %, markup %, selling price, cost price. With quantity: total profit, total revenue, total cost.
Key formulas
Margin % = (Profit / Selling Price) × 100  |  Markup % = (Profit / Cost) × 100  |  Selling Price (from margin) = Cost / (1 − Margin%)
Last updated

Profit, Margin, and Markup — What Is the Difference?

These three terms are often confused, but they measure different things:

  • Profit — the absolute money earned after deducting costs from revenue. Profit = Selling Price − Cost Price.
  • Profit Margin — profit expressed as a percentage of the selling price. It tells you how many cents of every sales dollar are profit.
  • Markup — profit expressed as a percentage of the cost price. It tells you how much you are adding on top of your cost.

For the same product, markup is always higher than margin (unless profit is zero). This is a critical distinction — pricing to a target markup is not the same as pricing to a target margin:

Example: Cost = $80, Selling Price = $100

  • Profit = $100 − $80 = $20
  • Margin = ($20 / $100) × 100 = 20%
  • Markup = ($20 / $80) × 100 = 25%

Same product, same price — but margin is 20% and markup is 25%.

Retailers and finance teams typically work with margin. Manufacturers, wholesalers, and traders often quote markup. Understanding which metric your buyer or buyer's buyer is using prevents costly pricing errors.

Profit Margin Formulas

This calculator supports four calculation directions. Each uses a different formula:

1. Profit & Margin (from cost + selling price)
Profit = Selling Price − Cost
Margin % = (Profit / Selling Price) × 100
Markup % = (Profit / Cost) × 100
2. Selling Price from Target Margin %
Selling Price = Cost ÷ (1 − Margin% / 100)
Example: Cost = $80, Target Margin = 30% → Selling Price = $80 / 0.70 = $114.29
3. Selling Price from Target Markup %
Selling Price = Cost × (1 + Markup% / 100)
Example: Cost = $80, Target Markup = 25% → Selling Price = $80 × 1.25 = $100.00
4. Cost from Selling Price + Target Margin %
Cost = Selling Price × (1 − Margin% / 100)
Example: Selling Price = $100, Target Margin = 20% → Cost = $100 × 0.80 = $80.00

Note: margin must always be less than 100% — a 100% margin would imply zero cost, which is impossible for physical goods. In the selling price formula, entering 100% would cause division by zero.

Margin vs Markup Conversion Table

If you know one metric and need the other, use this reference table — or convert with the formulas: Markup = Margin / (1 − Margin) and Margin = Markup / (1 + Markup).

Markup %Margin %Selling Price (Cost = $100)
5%4.76%$105.00
10%9.09%$110.00
20%16.67%$120.00
25%20.00%$125.00
33.33%25.00%$133.33
50%33.33%$150.00
100%50.00%$200.00
200%66.67%$300.00

Frequently Asked Questions

Profit margin is calculated as: Margin % = (Profit / Selling Price) × 100, where Profit = Selling Price − Cost. For example, cost = $80, selling price = $100: profit = $20, margin = ($20 / $100) × 100 = 20%. Margin is always based on selling price. Use Profit & Margin mode in this calculator for instant results.
Margin uses selling price as the base: Margin = Profit / Selling Price × 100. Markup uses cost as the base: Markup = Profit / Cost × 100. For the same product, markup is always higher than margin. Example: $20 profit on a $100 price, $80 cost — margin = 20%, markup = 25%. Confusing the two is a common pricing error.
Use the formula: Selling Price = Cost / (1 − Margin%). For example, cost = $80, target margin = 30%: Selling Price = $80 / (1 − 0.30) = $80 / 0.70 = $114.29. A common mistake is to add 30% directly to cost ($80 × 1.30 = $104) — that gives a 23% margin, not 30%. Use Price from Margin mode in this calculator.
Selling Price = Cost × (1 + Markup%). For example, cost = $80, markup = 25%: Selling Price = $80 × 1.25 = $100. This is equivalent to a 20% profit margin. Markup pricing is straightforward — you simply add a percentage on top of your cost. Use Price from Markup mode in this calculator.
It depends heavily on the industry. Retail typically achieves 2–10% net margin (gross margin 25–50%). Software/SaaS: 60–80% gross margin. Restaurants: 3–9% net margin. Service businesses: 15–35%. As a general rule: below 5% is thin, 10–20% is healthy for most product businesses, and above 20% is strong. Compare within your own industry rather than across sectors.
Gross profit margin = (Revenue − Cost of Goods Sold) / Revenue × 100. It measures profitability before operating expenses (rent, salaries, marketing). Net profit margin accounts for all expenses including operating costs, interest, and taxes. This calculator computes gross profit margin — the margin between your unit cost and unit selling price, before overheads.
Cost = Selling Price × (1 − Margin%). For example, selling price = $100, margin = 20%: Cost = $100 × (1 − 0.20) = $100 × 0.80 = $80. This is useful when you know your target selling price and required margin, and need to determine the maximum cost you can afford. Use Cost from Price mode in this calculator.
Because they use different denominators. Markup divides profit by cost (a smaller number), while margin divides profit by selling price (a larger number). Dividing the same profit by a smaller number always gives a bigger percentage. Example: profit = $20, cost = $80, selling price = $100 — markup = $20/$80 = 25%, margin = $20/$100 = 20%. As margin approaches 100%, markup approaches infinity.

Important Notes

This calculator computes gross profit margin — the margin between unit cost (cost of goods sold) and unit selling price. It does not account for operating expenses, overhead, taxes, or financing costs. For a full profitability picture, subtract fixed and variable operating costs from gross profit to arrive at net profit.

For businesses analysing break-even volume, see the Break-Even Point Calculator. To calculate the effect of discounts on final price, see the Discount Calculator.

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Calculator Category

This tool belongs to Finance Calculators. Browse similar tools for related calculations.

Results are for informational purposes only and do not constitute financial or business advice. Consult a qualified professional before making pricing or financial decisions.