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Profit Margin Calculator

Find your profit, margin and markup instantly and price with confidence.

Profit Margin
40.00%
Estimated Margin
Total Revenue: $100.00
Total Cost: $60.00
Net Profit: $40.00
Markup: 66.67%

Margin = Profit ÷ Revenue. Markup = Profit ÷ Cost.

Complete Profit Margin Calculator Guide 2025

Whether you run an online store, a small shop or a freelance business, knowing your profit margin is the fastest way to tell if your prices actually work. Revenue can look impressive while margins quietly shrink, so measuring profit as a percentage of sales is essential for pricing, budgeting and growth.

Our Profit Margin Calculator gives you instant results for profit, margin percentage and markup. Enter your cost, selling price, optional expenses and quantity, and everything updates in real time. It's free, works on any device and needs no sign-up.

Key Insight: Margin and markup are not the same thing. A 50% markup gives only a 33.3% margin. Mixing them up is one of the most common pricing mistakes in business.

Profit Margin Formulas

Step by Step

  1. Total Cost = (Cost Price × Quantity) + Extra Expenses
  2. Total Revenue = Selling Price × Quantity
  3. Net Profit = Total Revenue − Total Cost
  4. Profit Margin (%) = (Net Profit ÷ Total Revenue) × 100
  5. Markup (%) = (Net Profit ÷ Total Cost) × 100

Example: cost $60, selling price $100. Profit = $40, margin = 40 ÷ 100 = 40%, markup = 40 ÷ 60 = 66.67%.

Quick Tip: To hit a target margin, use Selling Price = Cost ÷ (1 − Margin). For a 40% margin on a $60 cost: $60 ÷ 0.60 = $100.

Margin vs. Markup Comparison

CostSelling PriceProfitMarginMarkup
$80$100$2020%25%
$70$100$3030%42.86%
$60$100$4040%66.67%
$50$100$5050%100%
$150$200$5025%33.33%
$500$800$30037.5%60%

Types of Profit Margin

1. Gross Profit Margin

Revenue minus the direct cost of goods sold, divided by revenue. It shows how efficiently you produce or buy what you sell.

2. Operating Profit Margin

Includes operating costs such as rent, salaries and marketing. It shows how profitable the day-to-day business really is.

3. Net Profit Margin

What remains after all expenses, including taxes and interest. Use the Extra Expenses field above to move from gross toward net margin.

Tips to Improve Your Profit Margin

  • Negotiate with suppliers or buy in bulk to lower your cost price.
  • Raise prices gradually on products customers value highly.
  • Cut unnecessary expenses such as unused subscriptions and wasted shipping costs.
  • Focus on high-margin products and promote them more.
  • Bundle products to increase the average order value.
Disclaimer: Results are for illustrative purposes only. Taxes, fees and other costs vary by business and country. This tool does not constitute financial advice.

Profit Margin: Frequently Asked Questions

What is a good profit margin?
It depends on the industry. Retail often sees 20-50% gross margins, software can exceed 70%, and many grocery businesses operate on net margins below 5%. Compare yourself with businesses in your own sector.
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price, while markup is profit as a percentage of the cost. Markup is always higher than margin for the same sale.
Can profit margin be negative?
Yes. If your total cost is higher than your revenue you are selling at a loss, and the calculator will show a negative margin.
How do I calculate the price for a target margin?
Divide your cost by (1 minus the margin as a decimal). For a 30% margin on a $70 cost, the price is $70 ÷ 0.70 = $100.