Profit Margin Calculator
Use this margin calculator to find your profit margin from a selling price and cost, or work backwards to find the price you need for a target margin.
How to calculate profit margin
Profit margin is your profit as a share of the selling price:
margin % = (revenue − cost) / revenue × 100
Rearranged, the price for a target margin is price = cost / (1 − margin / 100). Because you divide by the price, a margin can get close to 100% but never reach it.
Margin vs markup
They describe the same profit against a different base. Margin divides the profit by the price; markup divides it by the cost.
| Cost | Price | Profit | Margin | Markup |
|---|---|---|---|---|
| $60 | $75 | $15 | 20% | 25% |
| $60 | $100 | $40 | 40% | 66.7% |
| $60 | $120 | $60 | 50% | 100% |
| $60 | $150 | $90 | 60% | 150% |
So “add 40%” and “make a 40% margin” are not the same instruction. Adding 40% to a $60 cost gives $84 — only a 28.6% margin. A true 40% margin needs a 66.7% markup, a $100 price.
Worked examples
- Sell at $100, cost $60: profit $40, margin 40 / 100 = 40% (markup 40 / 60 = 66.7%).
- Cost $18, target margin 25%: price = 18 / 0.75 = $24, profit $6.
- Sell at $9, cost $10: profit −$1, margin = −11.1% — a loss.
Price for a target margin
What to charge on a $50 cost to hit each margin:
| Target margin | Divide cost by | $50 cost → price |
|---|---|---|
| 10% | 0.90 | $55.56 |
| 20% | 0.80 | $62.50 |
| 30% | 0.70 | $71.43 |
| 40% | 0.60 | $83.33 |
| 50% | 0.50 | $100 |
| 60% | 0.40 | $125 |
| 75% | 0.25 | $200 |
Frequently asked questions
What is the difference between margin and markup?
Both measure the same profit. Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. A 40% margin is a 66.7% markup.
Why isn't a 40% markup a 40% margin?
Markup is added to the cost, so the profit is a smaller slice of the larger selling price. A 40% markup on $60 is $84 — a margin of only 28.6%.
Can a profit margin be more than 100%?
No. Margin is profit divided by the selling price, and profit can never be larger than the price. Markup, which divides by the cost, has no upper limit.
Is this gross or net profit margin?
Gross. It compares revenue with the direct cost of the item. Net margin also subtracts overheads, taxes, and other expenses, so it is lower.