Profit Margin Calculator
Pick a mode: enter your cost and selling price to see gross profit, margin and markup, or enter your cost and a target margin or markup to get the price you should charge. A quick table shows the price at 20% to 60% margins for the same cost.
Margin and markup are easy to mix up. Margin is profit divided by the selling price; markup is profit divided by the cost. A product that costs $40 and sells for $60 has a 33.3% margin but a 50% markup.
Quick price table for this cost
| Margin | Price | Profit | Markup |
|---|
Margin vs markup
Margin is profit as a share of the selling price: (price − cost) ÷ price. Markup is profit as a share of the cost: (price − cost) ÷ cost. They are not the same: a 50% markup is only a 33.3% margin, and a 50% margin needs a 100% markup. These are gross figures, before overheads, shipping, card fees and taxes.
Frequently Asked Questions
What is the formula for profit margin?
Gross margin = (selling price − cost) ÷ selling price × 100. For example, ($60 − $40) ÷ $60 = 33.3%.
What is the difference between margin and markup?
Markup compares profit to cost; margin compares profit to the selling price. The same sale always shows a higher markup than margin, so a 50% markup is a 33.3% margin.
How do I price a product for a 40% margin?
Divide the cost by (1 − 0.40). A $40 cost needs a price of $40 ÷ 0.60 = $66.67 to earn a 40% gross margin.
Does this include overhead and taxes?
No. It works out gross margin from the cost per unit you enter. Rent, wages, card fees, shipping and income tax reduce your net profit, so add them to your cost if you want a fuller picture.