How to use the profit Margin Calculator
- Choose what you know: cost and selling price, cost and a target margin, or cost and a target markup.
- Enter the cost of the item or service.
- Enter the selling price, the target margin or the target markup, depending on your choice.
- Choose your currency.
- The result updates instantly as you type. There is no button to press.
- Use Copy result to copy the figures, or Copy link to share a link that reopens the profit Margin Calculator with the same inputs.
How it works
Margin and markup both describe profit, but they measure it against different numbers, and mixing them up is one of the most common pricing mistakes. Margin is profit as a share of the selling price. Markup is profit as a share of the cost. The same sale always has a higher markup than margin.
For example, buying at 60 and selling at 100 earns a profit of 40. That is a 40% margin (40 ÷ 100) but a 66.7% markup (40 ÷ 60). If you want a 40% margin and simply add 40% to cost, you get a price of 84 and only a 28.6% margin. This calculator converts between the two so you can price correctly.
Retailers and wholesalers often talk in markup because it is easy to apply to a cost price. Accountants, investors and financial statements use margin because it shows how much of each sale is kept as profit. The figures here are gross margin: they only include the direct cost of the item, not rent, wages, marketing or tax. Your net margin will be lower.
Formula
To convert between them: markup = margin / (1 − margin), and margin = markup / (1 + markup), with both written as decimals.
Example
A product costs $60 and sells for $100. Profit is $40, so the margin is 40% and the markup is 66.67%. To hit a 50% margin on the same cost, price it at 60 ÷ (1 − 0.5) = $120. A 50% markup, by contrast, gives a price of $90 and a margin of only 33.3%.
Frequently asked questions
Is a 50% markup the same as a 50% margin?
No. A 50% markup on a $100 cost gives a $150 price and a 33.3% margin. A 50% margin needs a $200 price, which is a 100% markup.
What is a good profit margin?
It varies hugely by industry. Grocery retail often runs on gross margins of 20–30%, while software and luxury goods can exceed 70%. Compare with businesses like yours.
Can margin be over 100%?
No. Margin is profit divided by price, and profit can never exceed the price unless the cost is negative. Markup, however, can be any size, such as 300%.
Disclaimer: This calculator gives estimates for general information and education. It is not financial, tax or investment advice. Lenders, banks and tax authorities may round differently, charge fees or apply rules this tool does not model, so confirm figures with a qualified professional or your provider before making decisions.