How to Use the Profit Margin Calculator
- Enter the cost of the item.
- Enter the selling price.
- See profit, margin percentage and markup instantly.
- Adjust the price to hit a target margin.
Margin versus markup
These two are easy to confuse. Markup is how much you add to your cost (profit divided by cost), while margin is profit as a share of the selling price (profit divided by price). A 50 percent markup is only a 33 percent margin, so mixing them up can quietly cost you money.
This calculator works in margin terms, showing profit as a percentage of the price, which is the figure most businesses track.
Using margin to price with confidence
Knowing your margin tells you how much of each sale is actually profit after the cost of the product, which is what has to cover overheads and leave something over. Thin margins leave little room for discounts or surprises.
Enter your cost and price to see the margin, or work backwards from a target margin to the price you need to charge. It runs in your browser, so your figures stay private.
Frequently Asked Questions
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. A 50% markup on a $10 cost gives a $15 price but only a 33% margin.
How is gross margin calculated?
Gross margin = (selling price − cost) ÷ selling price × 100. It shows what portion of each sale is profit before other expenses.
Can I work backwards from a target margin?
Adjust the selling price and watch the margin update until you reach the percentage you want.