Profit Margin Calculator

What is Profit Margin Calculator?

A profit margin calculator helps businesses determine how much profit they make relative to their costs and revenue. Understanding the difference between margin and markup is critical for pricing decisions, financial planning, and comparing profitability across products or services. Our calculator works in three modes: enter cost and revenue to find margin and markup, enter cost and desired margin to find the required selling price, or enter cost and desired markup to find the selling price and resulting margin. It supports multiple currencies and shows a visual breakdown of cost vs profit.

How It Works

Choose a calculation mode and enter two values — the calculator computes the rest. In Cost & Revenue mode, enter your cost and selling price to see profit, margin %, and markup %. In Cost & Margin mode, enter your cost and target margin to find the selling price needed. In Cost & Markup mode, enter cost and markup percentage to find the selling price and equivalent margin. All formulas are shown in the results.

Formula

Profit = Revenue − Cost
Margin (%) = (Profit / Revenue) × 100
Markup (%) = (Profit / Cost) × 100
Revenue from margin: Revenue = Cost / (1 − Margin/100)
Revenue from markup: Revenue = Cost × (1 + Markup/100)

Formula Explained

Margin and markup measure the same profit from different perspectives. Margin asks "what fraction of the selling price is profit?" while markup asks "how much did I add to the cost?" Converting between them: Margin = Markup / (1 + Markup/100) × 100. For example, a 100% markup gives a 50% margin because the profit equals the cost, but is only half the selling price.

Example

Cost: $20.00, Revenue: $25.00 Profit: $5.00 Margin: ($5 / $25) × 100 = 20.00% Markup: ($5 / $20) × 100 = 25.00% To achieve a 30% margin on a $20 cost: Revenue = $20 / (1 − 0.30) = $28.57 Profit = $8.57, Markup = 42.86%

Tips & Best Practices

✓Know your break-even point — the sales volume where total revenue equals total costs.
✓Track both gross margin (before overhead) and net margin (after all expenses).
✓A 50% markup is NOT the same as a 50% margin — it is only a 33.3% margin.
✓When negotiating discounts, calculate the margin impact, not just the percentage off.

Common Use Cases

•Setting retail prices based on desired profit margins
•Comparing profitability across different products or services
•Preparing financial reports and business plans
•Evaluating supplier quotes and wholesale pricing
•Teaching the difference between margin and markup in business courses

Frequently Asked Questions

Margin is profit as a percentage of revenue (selling price). Markup is profit as a percentage of cost. A product that costs $20 and sells for $25 has a profit of $5, a margin of 20% ($5/$25), and a markup of 25% ($5/$20). Margin is always lower than markup for the same product.

Profit Margin = (Revenue − Cost) / Revenue × 100. For example, if you buy a product for $40 and sell it for $60: margin = ($60 − $40) / $60 × 100 = 33.33%.

Markup = (Revenue − Cost) / Cost × 100. Using the same example: markup = ($60 − $40) / $40 × 100 = 50%. Note that 50% markup = 33.33% margin.

It varies by industry. Retail: 2-5% net margin is typical. Software/SaaS: 70-90% gross margin. Restaurants: 3-9% net margin. Manufacturing: 5-10%. Focus on your industry benchmarks rather than a universal "good" number.

No. For any positive profit, margin is always less than markup because margin divides by revenue (the larger number) while markup divides by cost (the smaller number). A 50% margin equals a 100% markup. A 100% margin is impossible (it would mean cost was zero).