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Profit Margin Calculator
Calculate profit, margin %, and markup % — with what-if pricing analysis
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Calculation Mode
Enter Values
The total cost to produce or acquire the item
%
Must be between 0% and 100%
%
Percentage above cost price
📖 Margin vs Markup
Profit Margin = Profit ÷ Revenue × 100
(% of selling price that is profit)
Markup = Profit ÷ Cost × 100
(% added on top of cost price)
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Enter values and press Calculate
Profit, margin %, markup % and more will appear here
Calculating…
Selling Price − Cost =
profit margin
Cost
cost price
Revenue
selling price
Margin
profit / revenue
Markup
profit / cost
Revenue Breakdown
Cost:
()
Profit:
()
Key Metrics
Revenue-to-Cost Ratio
Cost as % of Revenue
Markup (on cost)
Profit per unit
Profit at 100 units
Profit at 1,000 units
What-If Pricing Table
Required selling price for different margin targets (cost = )
Margin
Sell Price
Profit
Markup
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Benchmarks are gross profit margin ranges. Net margins will vary after operating expenses.
The four pricing modes and the arithmetic behind them
Everything rests on one figure: gross profit, which is selling price minus cost price. From that, margin is profit divided by selling price, and markup is profit divided by cost price, each multiplied by 100 to give a percentage. The two are different views of the same money, which is why the calculator always shows both.
In Cost and Revenue mode you supply both prices and the tool reports profit, margin, markup and the supporting ratios. In Cost and Margin mode it rearranges the margin equation to give selling price equals cost divided by one minus the margin as a decimal. In Cost and Markup mode it uses selling price equals cost multiplied by one plus the markup as a decimal. In Revenue and Margin mode it runs the first rearrangement backwards, so cost equals selling price multiplied by one minus the margin.
The derived figures follow from those. Cost as a percentage of revenue is simply the complement of margin. The revenue-to-cost ratio is selling price divided by cost. The margin field is capped below 100 per cent because a margin of exactly 100 per cent would require a cost of zero.
In Cost and Revenue mode you supply both prices and the tool reports profit, margin, markup and the supporting ratios. In Cost and Margin mode it rearranges the margin equation to give selling price equals cost divided by one minus the margin as a decimal. In Cost and Markup mode it uses selling price equals cost multiplied by one plus the markup as a decimal. In Revenue and Margin mode it runs the first rearrangement backwards, so cost equals selling price multiplied by one minus the margin.
The derived figures follow from those. Cost as a percentage of revenue is simply the complement of margin. The revenue-to-cost ratio is selling price divided by cost. The margin field is capped below 100 per cent because a margin of exactly 100 per cent would require a cost of zero.
Worked example: pricing an item that costs 40
Suppose a product costs 40 to make and you sell it for 100 in your chosen currency.
Gross profit is 100 minus 40, which is 60. Margin is 60 divided by 100, giving 60 per cent. Markup is 60 divided by 40, giving 150 per cent. Cost as a share of revenue is 40 divided by 100, or 40 per cent, which is exactly 100 minus the margin. The revenue-to-cost ratio is 100 divided by 40, or 2.5 times. Scaled up, the same item returns 6,000 of gross profit over 100 units and 60,000 over 1,000 units.
Now run the arithmetic the other way in Cost and Margin mode. With a cost of 40 and a target margin of 60 per cent, the price is 40 divided by 0.4, which is 100, matching the starting figure. In Cost and Markup mode, a cost of 40 with a 150 per cent markup gives 40 multiplied by 2.5, again 100.
Drop the price to 80 and profit falls to 40, margin to 50 per cent and markup to 100 per cent, which is the kind of comparison the what-if table lays out row by row.
Gross profit is 100 minus 40, which is 60. Margin is 60 divided by 100, giving 60 per cent. Markup is 60 divided by 40, giving 150 per cent. Cost as a share of revenue is 40 divided by 100, or 40 per cent, which is exactly 100 minus the margin. The revenue-to-cost ratio is 100 divided by 40, or 2.5 times. Scaled up, the same item returns 6,000 of gross profit over 100 units and 60,000 over 1,000 units.
Now run the arithmetic the other way in Cost and Margin mode. With a cost of 40 and a target margin of 60 per cent, the price is 40 divided by 0.4, which is 100, matching the starting figure. In Cost and Markup mode, a cost of 40 with a 150 per cent markup gives 40 multiplied by 2.5, again 100.
Drop the price to 80 and profit falls to 40, margin to 50 per cent and markup to 100 per cent, which is the kind of comparison the what-if table lays out row by row.
Margin is not markup, and gross is not net
The most expensive mistake in pricing is treating margin and markup as the same number. They share a numerator but not a denominator, so a 50 per cent markup is only a 33.3 per cent margin, and a 100 per cent markup a 50 per cent margin. Suppliers often quote markup while accountants talk in margin, so confirm which one a target refers to before setting a price against it. The calculator shows both together so the gap is always visible.
The second thing to keep in mind is that these are gross figures. Cost price here means the direct cost of making or buying the item. Rent, wages, marketing, payment fees, returns and tax all sit below this line, so a healthy gross margin can still leave a loss once overheads are counted. If you want a net picture, load the cost field with a fully absorbed cost rather than the bare unit cost.
Finally, treat margin targets as a starting point rather than a rule. What a market will bear varies by sector and by channel, and pricing below a competitor on a thinner margin is a decision about volume, not arithmetic. Nothing here is financial advice.
The second thing to keep in mind is that these are gross figures. Cost price here means the direct cost of making or buying the item. Rent, wages, marketing, payment fees, returns and tax all sit below this line, so a healthy gross margin can still leave a loss once overheads are counted. If you want a net picture, load the cost field with a fully absorbed cost rather than the bare unit cost.
Finally, treat margin targets as a starting point rather than a rule. What a market will bear varies by sector and by channel, and pricing below a competitor on a thinner margin is a decision about volume, not arithmetic. Nothing here is financial advice.
Frequently Asked Questions
Both use the same profit figure, but margin divides it by the selling price while markup divides it by the cost. An item costing 40 and selling for 100 carries a 60 per cent margin and a 150 per cent markup. Markup is always the larger number, and the gap widens as prices rise above cost.
Use the Cost and Margin mode. Enter your cost and the margin you want, and the price is calculated as cost divided by one minus the margin expressed as a decimal. A cost of 25 with a 40 per cent target gives 25 divided by 0.6, which is 41.67 in your chosen currency.
A 100 per cent margin means profit equals the whole selling price, which is only possible if the item cost nothing. The formula divides by one minus the margin, so at 100 per cent you would be dividing by zero. The field therefore accepts values from zero up to just under 100 per cent.
No. The calculation is gross profit only, based on the cost and price you type in. To account for selling fees, delivery or packaging, add them to the cost figure before calculating. Sales tax is normally excluded from revenue altogether, so enter your price before tax for a consistent result.
It depends heavily on the sector. Grocery and electronics retail typically run on thin gross margins with high volume, while services and software usually carry much wider ones. Compare against businesses of your own type and channel rather than against a single benchmark figure, and factor in your overheads before judging.