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MARGIN CALCULATOR

Profit Margin Calculator

Enter your cost and price to see your profit margin and markup.

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PROFIT MARGIN

What profit margin means

Profit margin is the percentage of a sale left after the direct cost of that item.

FORMULA

Profit margin formula

Take the cost away from the selling price. Divide that profit by the selling price and multiply by 100.

Profit margin(Selling price − Cost) ÷ Selling price × 100

EXAMPLE

$100 selling price, $60 cost

Profit is $40. That is a 40% margin and a 66.67% markup.

Gross profit
$40
Profit margin
40%
Markup
66.67%

MARGIN AND MARKUP

They are not the same percentage.

Margin is based on the selling price. Markup is based on cost. On a $100 sale with a $60 cost, 40% margin equals 66.67% markup.

MarginProfit ÷ selling price

MarkupProfit ÷ cost

Target priceCost ÷ (1 − target margin)

QUESTIONS

Profit margin questions

How do you calculate profit margin?

Take the cost away from the selling price. Divide the result by the selling price, then multiply by 100. For example: a $60 cost and $100 price gives you $40 profit and a 40% margin.

What is the difference between margin and markup?

Margin is based on the selling price. Markup is based on the cost. They use the same profit amount, but the percentage is different.

How do I set a price for a target margin?

Divide your cost by one minus the target margin. A $60 cost with a 40% target margin needs a $100 selling price.

Can profit margin be negative?

Yes. If the cost is higher than the selling price, you are losing money on that sale.

Which costs should I include?

Use the costs tied to that sale: materials, production, packaging, shipping, payment fees, and any other direct cost.