Profit Margin Calculator
Turn cost and selling price into profit, margin and markup percentages.
How to use the Profit Margin Calculator
- Enter your cost per item.
- Enter the selling price.
- See the profit, margin % and markup %.
Margin % = (Price − Cost) ÷ Price × 100 · Markup % = (Price − Cost) ÷ Cost × 100
About the Profit Margin Calculator
Enter a cost and a selling price and this calculator returns the profit per unit, the profit margin and the markup. Margin = (Price − Cost) ÷ Price × 100. Markup = (Price − Cost) ÷ Cost × 100. Both describe the exact same profit — they just divide it by different things.
That difference is the one that costs businesses money. Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. Buy at 40 and sell at 60 and you have a 33.3% margin but a 50% markup — one deal, two honest percentages. Markup is always the larger number, so trying to hit a 50% margin by adding 50% to cost leaves you short. To price to a target margin, divide cost by (1 − margin): a 40% margin on a cost of 30 needs a price of 30 ÷ 0.60 = 50. The markup calculator runs the same relationship from the other end.
This is a gross figure. It uses only the single direct cost you type in, so it does not subtract overheads, salaries, shipping, payment-processing or marketplace fees, returns or tax — your net margin after those is lower, often considerably. It also treats the price as tax-exclusive: if your price includes VAT or sales tax, strip it out first or the margin will read too high.
Frequently asked questions
What is the difference between margin and markup?
Margin measures profit against the selling price; markup measures the same profit against the cost. Cost 40, price 60, profit 20: that is a 33.3% margin and a 50% markup. Same deal, two different percentages — always confirm which one is being quoted.
How do I price for a target margin?
Divide your cost by (1 − the target margin as a decimal). For a 40% margin on a cost of 30: 30 ÷ 0.60 = 50. Adding 40% to the cost instead would give 42, which is only a 28.6% margin.
Is this gross margin or net margin?
Gross. It compares the selling price to the one direct cost you enter. Net margin subtracts everything else — overheads, staff, shipping, fees, returns and tax — and will always be lower. Include more of your true per-unit cost if you want a figure closer to reality.
Can profit margin be more than 100%?
No. Profit is always smaller than the price it is divided by, so margin approaches 100% but never reaches it while cost is above zero. Markup has no such ceiling — it can be 200%, 500% or more.
Should the selling price include VAT or sales tax?
No. Tax you collect is not revenue you keep, so enter the tax-exclusive price. Feeding in a tax-inclusive price inflates both the profit and the margin.
Guides & articles about this tool
VAT Explained: How to Add and Remove Sales Tax
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