Profit margin & markup calculator
Enter your cost and price to get gross profit, margin, and markup — or set a target margin or markup to find the selling price you need. See exactly why margin and markup are not the same number.
Inputs
Quantity gives total cost, revenue, and profit. Leave blank for per-unit only.
Result
Margin ↔ markup converter
Type either value — the other updates instantly. A 50% markup is only a 33.3% margin.
| Margin | Markup | Margin | Markup |
|---|---|---|---|
| 10% | 11.1% | 40% | 66.7% |
| 15% | 17.6% | 50% | 100% |
| 20% | 25% | 60% | 150% |
| 25% | 33.3% | 66.7% | 200% |
| 33.3% | 50% | 75% | 300% |
What is profit margin?
Gross profit margin is the share of a sale that you keep after paying for the product itself. It is your gross profit — selling price minus cost — divided by the selling price, expressed as a percentage. A 40% margin means 40 cents of every dollar of revenue is gross profit.
Margin is the number to price against, because it is measured against the money the customer actually pays. It is also the figure investors and accountants use to compare profitability across products and businesses.
Margin vs markup — why they're different
Margin and markup describe the same gap between cost and price, but from two different reference points, so they are never the same number for a profitable product.
Profit as a share of the selling price.Margin = (Price − Cost) ÷ Price
Profit as a share of the cost.Markup = (Price − Cost) ÷ Cost
Because price is always larger than cost, the same profit is a smaller fraction of the price than of the cost — so margin is always lower than markup. A 50% markup is a 33.3% margin; a 50% margin is a 100% markup. Confusing the two is one of the most common pricing mistakes: setting a "50% markup" thinking you are keeping half the revenue, when you are actually keeping a third.
The formulas
Profit = Price − Cost
Margin = (Price − Cost) ÷ Price
Markup = (Price − Cost) ÷ Cost
Price = Cost ÷ (1 − Margin) (from a target margin)
= Cost × (1 + Markup) (from a target markup)
Markup = Margin ÷ (1 − Margin)
Margin = Markup ÷ (1 + Markup)
Use decimals in the formulas — a 40% margin is 0.40.
Gross, operating, and net margin
This calculator works out gross margin, where cost means the cost of the goods (COGS). Two related figures go further down the income statement: operating margin subtracts running costs such as salaries, rent, and marketing, and net margin subtracts everything left — interest and tax included. Gross margin tells you whether a product is priced right; net margin tells you whether the whole business is profitable.
What is a healthy margin?
It depends heavily on the industry and what the cost figure includes. Commodity retail and grocery often run on thin gross margins in the low double digits, general consumer goods commonly sit somewhere in the 30–50% range, and software or digital products can exceed 80% because each extra unit costs almost nothing to make. Rather than chasing a benchmark, make sure your margin covers all the costs that sit below gross — fulfillment, marketplace fees, returns, and overhead — and still leaves a profit.
Glossary
- Gross profit
- Selling price minus the cost of goods, before any other expenses.
- Margin
- Gross profit as a percentage of the selling price.
- Markup
- Gross profit as a percentage of the cost.
- Cost (COGS)
- The direct cost of producing or buying the product you sell.
- Selling price
- The amount the customer pays for one unit.
- Operating margin
- Profit after operating expenses, as a percentage of revenue.
- Net margin
- Final profit after all costs and taxes, as a percentage of revenue.
- Break-even price
- The price at which profit is zero — equal to the cost for a single product.
Frequently asked questions
What is the difference between margin and markup?
How do I calculate profit margin?
(Price − Cost) ÷ Price. Multiply by 100 for a percentage. For example, a $25 price and $15 cost gives a $10 profit and a 40% margin.How do I convert markup to margin?
Margin = Markup ÷ (1 + Markup) with decimals. A 25% markup becomes 0.25 ÷ 1.25 = 0.20, or a 20% margin. To go the other way, use Markup = Margin ÷ (1 − Margin).What selling price gives a 30% margin?
Price = Cost ÷ (1 − 0.30) = Cost ÷ 0.70. A $14 cost would need a $20 selling price for a 30% margin. Switch the calculator to "Cost & target" mode to do this automatically.