Profit Margin Calculator
Find profit, margin and markup from your cost and price.
Profit margin
40%
- Profit
- $40.00
- Markup
- 66.67%
- Revenue
- $100.00
- Cost
- $60.00
How to use the Profit Margin Calculator
- Enter what the item costs you.
- Choose whether you know the revenue (selling price) or the markup percentage.
- Enter that value.
- Read the profit, margin, markup and revenue.
About the Profit Margin Calculator
Margin and markup are often confused, yet they give very different numbers for the same sale. This profit margin calculator takes your cost and either your selling price or your markup percentage, then shows the profit, the margin percentage and the markup percentage side by side, so you can price products with confidence.
Profit is revenue minus cost. Margin is profit divided by revenue, and markup is profit divided by cost, both shown as percentages. Because revenue is larger than cost on a profitable sale, margin is always lower than markup.
For example, a product that costs 60 and sells for 100 earns a profit of 40. The margin is 40 ÷ 100 = 40%, while the markup is 40 ÷ 60 = 66.67%. If you start from markup instead, revenue is cost × (1 + markup ÷ 100): a 50% markup on a cost of 80 gives a selling price of 120 and a margin of 33.33%. If revenue is below cost, profit and margin are negative, which shows a loss. All figures exclude tax, shipping and overheads.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. A 50% markup equals a 33.3% margin.
Which should I use to set prices?
Many businesses set prices using markup, because it is applied to cost, and judge performance using margin, because it is a share of sales.
Can the margin be above 100%?
No. Margin cannot exceed 100% because profit cannot be more than revenue. Markup can be any size.
What does a negative margin mean?
You are selling below cost and making a loss on that item.
Are overheads included?
No. This is gross margin on the cost you enter. Add rent, wages and other expenses to your cost if you want a net figure.