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Profit Margin Calculator

Calculate gross profit, profit margin percentage, and markup for any product or service. Switch between Cost & Price mode and Cost & Target Margin mode.

Profit Margin Calculator

Gross Profit

$30.00

Profit Margin

37.50%

Markup

60.00%

Margin = profit ÷ selling price × 100

Markup = profit ÷ cost × 100

Margin vs Markup: What's the Difference?

Margin and markup are two ways of expressing the same profit — but they use different reference points. Margin divides profit by the selling price. Markup divides profit by the cost. Because cost is always lower than selling price, the markup percentage is always higher than the margin percentage for the same transaction.

This distinction matters in business conversations. When a buyer asks "what's your margin?" and you say "60%", they may expect to pay significantly less, thinking you're marking up from cost by 60%. But 60% markup from a $50 cost is an $80 price — a 37.5% margin.

Always clarify whether margins or markups are being discussed to avoid miscommunication in pricing negotiations.

Profit Margin FAQs

What's the difference between margin and markup?
Margin is profit expressed as a percentage of the selling price. Markup is profit expressed as a percentage of the cost. For example, if cost is $50 and price is $80: margin = $30/$80 = 37.5%, markup = $30/$50 = 60%. Margin is always lower than markup for the same transaction.
How do I calculate profit margin?
Profit margin = (Selling Price − Cost) ÷ Selling Price × 100. If you sell a product for $100 that costs you $60 to produce, your profit margin is ($100 − $60) ÷ $100 × 100 = 40%. This is also called "gross margin" in business contexts.
What's a good profit margin?
It varies significantly by industry. Retail businesses often operate at 2–10% net margin. Software and SaaS companies can achieve 60–80% gross margins. Service businesses typically range from 20–40%. As a freelancer or consultant, target margins of 20–40% above your base cost to account for business expenses.
How do I set my price from a target margin?
Use the reverse formula: Price = Cost ÷ (1 − Target Margin %). To achieve a 40% margin on a $60 cost: Price = $60 ÷ (1 − 0.40) = $60 ÷ 0.60 = $100. This calculator's "Cost & Target Margin" mode does this automatically.
Why is margin always lower than markup?
Because they use different bases. Margin divides profit by the (larger) selling price, while markup divides by the (smaller) cost. The same profit amount becomes a smaller percentage when divided by a larger number. This is why a 60% markup does not give you a 60% margin — it gives you 37.5%.
Does this include taxes?
No, this calculator computes gross profit margin, which is before taxes, operating expenses, and overhead. Net profit margin (after all expenses) will be lower. For accurate business planning, account for all your costs including taxes, salaries, rent, and software subscriptions.

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