Profit Margin Calculator
Find your profit margin from cost and selling price, or work backwards: enter a target margin to find the selling price or the maximum cost you can afford.
Profit Margin
Profit Margin
33.3%
Profit: $25 · Markup: 50.0%
Cost Price
$50
Profit
$25
Selling Price
$75
How It Works
Profit margin and markup are both profitability ratios but measure different things, and confusing them is one of the most common pricing mistakes. Margin expresses profit as a percentage of the SELLING price: Margin = (Price − Cost) ÷ Price × 100. Markup expresses the same profit as a percentage of the COST: Markup = (Price − Cost) ÷ Cost × 100. A product costing $100 sold for $150 has a 50% markup but only a 33.3% margin — the two numbers are never equal (except at 0%), and margin is always smaller than markup for any profitable price. This calculator handles all three common questions: (1) given cost and price, find the margin; (2) given cost and a target margin, find the selling price you need to charge; (3) given a selling price and a target margin, find the maximum cost you can afford to stay profitable.
Formula
Margin % = (Selling Price − Cost) ÷ Selling Price × 100. Markup % = (Selling Price − Cost) ÷ Cost × 100. Price = Cost ÷ (1 − Margin/100).
Frequently Asked Questions
What is the difference between margin and markup?
Margin is profit as a % of the selling price: (Price−Cost)/Price. Markup is profit as a % of the cost: (Price−Cost)/Cost. A $100 cost sold at $150 is a 50% markup but only a 33.3% margin — markup is always higher than margin on a profitable sale.
How do I calculate selling price from a target margin?
Price = Cost ÷ (1 − Margin/100). For a 40% margin on a $600 cost item: Price = 600 ÷ (1 − 0.40) = 600 ÷ 0.60 = $1,000.
What is a good profit margin?
It varies widely by industry — retail often runs 20–50% gross margin, while software/SaaS can exceed 70–90% due to low marginal cost. Compare your margin to others in your specific industry rather than a universal benchmark.
Why can margin never reach 100%?
Margin = Profit/Price, and Price always includes the cost as part of it (unless cost is zero). As cost approaches zero, margin approaches 100% but mathematically never equals or exceeds it for any positive cost.
Is this gross margin or net margin?
This calculates gross margin — based only on cost of goods sold (COGS) and selling price. Net margin would further subtract operating expenses, taxes, and interest, which this tool does not include.