📈 Profit Margin Calculator
Enter what something cost and what it sold for to see gross profit, margin and markup side by side.
Quick answer: Profit margin = (revenue − cost) ÷ revenue × 100. For example, selling for $100 something that cost $60 gives $40.00 gross profit, a 40.00% margin and a 66.67% markup.
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Profit Margin Calculator inputs
Result
Gross profit margin
40%
$40.00 gross profit on $100.00 revenue
| Revenue | $100.00 |
| Cost | −$60.00 |
| Gross profit | $40.00 |
- Margin
- 40%
- Markup
- 66.67%
Price needed for a target margin on $60.00 cost
| Target margin | Selling price | Profit | Equivalent markup |
|---|---|---|---|
| 10% | $66.67 | $6.67 | 11.1% |
| 20% | $75.00 | $15.00 | 25% |
| 25% | $80.00 | $20.00 | 33.3% |
| 30% | $85.71 | $25.71 | 42.9% |
| 40% | $100.00 | $40.00 | 66.7% |
| 50% | $120.00 | $60.00 | 100% |
| 60% | $150.00 | $90.00 | 150% |
How to calculate profit margin
Gross profit is what remains from revenue after paying the direct cost of what you sold. Profit margin expresses that profit as a percentage of revenue, which makes products and businesses of different sizes easy to compare.
Gross profit = Revenue − Cost · Margin = Gross profit ÷ Revenue × 100 · Markup = Gross profit ÷ Cost × 100
Example: a product costs $60 and sells for $100 → gross profit $40.00, margin 40.00%, markup 66.67%.
Margin vs markup
Margin can never reach 100% (that would mean zero cost), whereas markup has no upper limit. Confusing the two is a classic pricing mistake: adding a 40% markup to a $60 cost gives an $84 price and only a 28.6% margin.
| Margin | Equivalent markup |
|---|---|
| 20% | 25% |
| 25% | 33.3% |
| 33.3% | 50% |
| 50% | 100% |
| 60% | 150% |
Working backwards to a price
Price = Cost ÷ (1 − Target margin ÷ 100)
A $60 item needs a $75 price for a 20% margin and a $120 price for a 50% margin.
Tips for improving margin
- Include every direct cost – shipping in, packaging and payment fees – or your margin will look better than it is.
- Track margin per product; a few low-margin lines can drag down an otherwise healthy business.
- Small price rises often lift margin more than equivalent cost cuts.
- Watch the trend over time: a slowly shrinking margin is an early warning that costs are rising faster than prices.
Remember that a healthy gross margin still has to pay for rent, salaries and marketing before any net profit is left over.
Estimates for educational purposes, not financial or tax advice.
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. The same $40 profit on a $60 cost and $100 price is a 40% margin but a 66.67% markup.
What is a good profit margin?
It varies widely by industry. Grocery retail often runs gross margins of 25–30%, restaurants 60–70% on food cost, and software 70–90%. Compare against businesses like yours rather than a universal number.
How do I find the price for a target margin?
Divide the cost by 1 minus the margin as a decimal. To earn a 40% margin on a $60 cost, charge 60 ÷ 0.6 = $100. The table under the result does this for common targets.
Is gross margin the same as net margin?
No. Gross margin only subtracts the direct cost of the goods sold. Net margin also subtracts overheads, interest and taxes, so it is always lower.