Profit Margin Calculator
Understand profit margin versus markup and find the right selling price.
How to use: Enter your cost and either your selling price or your margin to see profit, margin and markup.
How to use the Profit Margin Calculator
Margin and markup both describe profit as a percentage, but they use different bases, and mixing them up is one of the most common pricing mistakes. Margin is profit divided by the selling price. Markup is profit divided by the cost.
For example, buying an item for 60 and selling it for 100 earns a profit of 40. The margin is 40% (40 Γ· 100) while the markup is about 66.7% (40 Γ· 60). A 50% markup on cost therefore gives only a 33.3% margin.
The first section works out profit, margin and markup from your cost and price. The second and third sections work backwards: tell the calculator the margin or markup you want and it returns the selling price that delivers it. To get a 40% margin on an item costing 60, you must charge 100, not 84.
Remember that these figures cover the product only. Shipping, fees, advertising and your own time all reduce real profit, so aim for a margin that leaves room for them. Retail businesses often talk about margin when reporting results and markup when setting prices, so keep the distinction clear when comparing numbers.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a share of the selling price; markup is profit as a share of cost. Markup is always the larger number for the same sale.
How do I price for a 30% margin?
Divide the cost by 0.70. An item that costs 70 must sell for 100 to earn a 30% margin.
Can margin exceed 100%?
No. Margin cannot exceed 100% because profit cannot be more than the selling price, but markup can.