Profit Margin Calculator

Work out margin, markup and profit from cost and price — or find the selling price you need for a target margin.

1 — From cost & selling price

—Profit
—Margin
—Markup

2 — Price for a target margin

—Required Price
—Profit per Unit

Margin vs Markup — Don’t Mix Them Up

They use the same numbers but different bases, and confusing them silently destroys profitability:

  • Margin = Profit ÷ Selling price. Cost 60, price 100 → profit 40 → margin 40%.
  • Markup = Profit ÷ Cost. Same numbers → markup 66.7%.
  • A “50% markup” is only a 33.3% margin. If your accountant asks for margin and you give markup, your prices are too low.

To price for a target margin, the formula is Price = Cost ÷ (1 − margin) — not Cost × (1 + margin). Calculator 2 uses the correct formula.

Frequently Asked Questions

What is a good profit margin?

It varies hugely by industry: groceries run 1–3% net, restaurants 3–9%, retail 5–10%, software 70%+ gross. Compare against your industry, not a universal number.

Gross vs net margin?

This calculator gives gross margin (price minus direct cost). Net margin also subtracts rent, salaries, marketing and taxes.

Why can’t margin be 100%?

A 100% margin would mean zero cost. As your target margin approaches 100%, the required price approaches infinity — that’s why the formula divides by (1 − margin).

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