Profit Margin Calculator
Enter cost and selling price to get profit margin, markup and profit instantly, or use revenue and expenses for gross and net margin.
For one product or service. Enter what it costs you and what you charge.
What one unit costs you: materials, product cost, shipping in.
Results update as you type. Your numbers never leave this browser.
You keep 60¢ of every $1 in sales
- Profit per item
- $9.00
- Markup
- 150%
- Cost share of price
- 40%
Find the price for a target margin
To earn a 50% margin, charge $12.00
Price = cost ÷ (1 − target margin). Markup at that price: 100%.
What if you change the price?
| Price change | New price | Margin |
|---|---|---|
| -5% | $14.25 | 57.9% |
| +5% | $15.75 | 61.9% |
| +10% | $16.50 | 63.6% |
Same cost per item.
What is profit margin?
Profit margin is the share of each sales dollar you keep as profit. It equals profit divided by revenue, times 100. A 25% margin means you keep $0.25 of every $1 in sales; the other $0.75 pays for the costs you included.
Margin is always measured against the selling price, never against cost. That is the single difference between margin and markup, and mixing them up is one of the most common pricing mistakes small businesses make.
Profit margin formulas
(Revenue − Cost of goods sold) ÷ Revenue × 100(Revenue − All expenses) ÷ Revenue × 100(Price − Cost) ÷ Cost × 100Use gross margin to judge a product’s pricing. Use net margin to judge the whole business after rent, payroll, software and other operating costs. In “Revenue & expenses” mode this calculator’s net margin covers only the expenses you enter, so add interest and taxes yourself if you want a number that matches your income statement.
Example: pricing a handmade mug
A mug costs $6 to make (clay, glaze, kiln time, packaging) and sells for $15.
- Profit per mug: $15 − $6 = $9
- Profit margin: $9 ÷ $15 = 0.60, so 60%
- Markup: $9 ÷ $6 = 1.50, so 150%
Same mug, same $9 profit, two very different percentages. Quote margin when you talk about profitability and markup when you set prices from cost.
Margin vs. markup conversion
To hit a target margin, your markup has to be higher than the margin itself:
| Target margin | Required markup | Price for a $10 cost |
|---|---|---|
| 10% | 11.1% | $11.11 |
| 20% | 25% | $12.50 |
| 25% | 33.3% | $13.33 |
| 30% | 42.9% | $14.29 |
| 40% | 66.7% | $16.67 |
| 50% | 100% | $20.00 |
| 60% | 150% | $25.00 |
Common mistakes
- Dividing profit by cost. That gives markup, not margin. A 50% markup is only a 33.3% margin.
- Leaving out variable costs. Payment processing, marketplace fees, shipping and returns all reduce what you keep from each sale.
- Mixing time periods. Monthly revenue against annual expenses produces a margin that means nothing. Keep every input in the same period.
- Comparing gross to net. A competitor’s published net margin is not comparable with your product’s gross margin.
Profit Margin FAQ
What is a good profit margin?
It depends on your industry. Grocery and other high-volume retail run on thin net margins, while software and professional services keep far more of each dollar. Compare yourself with businesses like yours, for example with the US industry margin tables published by NYU Stern’s Aswath Damodaran, and track your own trend over time.
How do I calculate profit margin from cost and selling price?
Subtract cost from the selling price, divide the result by the selling price and multiply by 100. For a $40 item that costs $28: ($40 − $28) ÷ $40 × 100 = 30%.
How do I find the selling price for a target margin?
Divide the cost by one minus the target margin. For a $28 cost and a 40% target: $28 ÷ (1 − 0.40) = $46.67. The slider under the calculator does this for you.
Can profit margin be negative?
Yes. When costs are higher than revenue, profit is negative and so is the margin. The calculator turns red and shows how much you lose per sale or per period.
Is this a complete net-income calculation?
No. The result reflects only the costs you enter. Include all relevant expenses, or use your financial statements, for net income after interest and taxes.