Profit Margin Calculator
Enter your cost and selling price to see profit, margin and markup. Or switch mode and work backwards to the price you need for a target margin or markup.
Profit margin
60.00%
Profit per unit
$60.00
Markup
150.00%
Selling price
$100.00
Margin and markup formulas
- Profit = price − cost
- Margin = profit ÷ price × 100
- Markup = profit ÷ cost × 100
- Price from target margin = cost ÷ (1 − margin)
- Price from markup = cost × (1 + markup)
To convert between the two: markup = margin ÷ (1 − margin), and margin = markup ÷ (1 + markup), with both written as decimals.
Worked example
You buy a product for $40 and sell it for $100.
- Profit: $100 − $40 = $60
- Margin: $60 ÷ $100 = 60 %
- Markup: $60 ÷ $40 = 150 %
Now the reverse: you want a 60 % margin on a $40 product. The price is $40 ÷ (1 − 0.6) = $100. If you had simply added 60 % to the cost, you would charge $64 and earn only a 37.5 % margin. Confusing the two is one of the most common pricing errors. The margin vs markup guide explains this in more detail.
Frequently asked questions
What is the difference between margin and markup? +
Both measure the same profit, but against different bases. Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A product that costs $40 and sells for $100 has a 60 % margin and a 150 % markup.
How do I calculate the price from a target margin? +
Divide the cost by (1 − target margin). For a cost of $40 and a 60 % target margin: $40 ÷ 0.4 = $100. Adding 60 % to the cost ($64) would give only a 37.5 % margin, a common pricing mistake.
Can a margin be more than 100 %? +
No. Margin is profit divided by price, and profit can never exceed the price, so margin stays below 100 %. Markup has no upper limit: a product that costs $10 and sells for $50 has a 400 % markup.
Is this gross margin or net margin? +
If you enter the direct cost of the product (materials, purchase price, shipping to you), the result is gross margin. Net margin also subtracts overheads such as rent, salaries and marketing, which you would need to spread across all sales.
For information only. This calculator gives estimates based on the numbers you enter. It is not financial, tax or investment advice. Check important decisions with a qualified professional.
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