Business
Profit Margin Calculator
Gross margin and markup from cost and price, or the selling price for a target margin or markup.
Updated:
Result
Updates as you typeProfit margin
20%
- Profit
- 20.00
- Margin (of price)
- 20%
- Markup (on cost)
- 25%
How it's calculated
Profit margin shows how much of the selling price you keep as profit. Markup shows how much you added on top of the cost. Both describe the same profit against a different base, and mixing them up is the usual reason a business earns less than it planned. Enter all amounts before sales tax or VAT.
Worked example
An item that costs 80 sells for 100:
- Profit: 100 − 80 = 20.00
- Margin: 20 / 100 = 20%; markup: 20 / 80 = 25%
- For a 40% margin on a cost of 250: 250 / 0.60 = 416.67
Margin and markup table
| Margin | Markup on cost | Price for cost 100 |
|---|---|---|
| Margin: 10% | Markup on cost11.1% | Price for cost 100111.11 |
| Margin: 15% | Markup on cost17.6% | Price for cost 100117.65 |
| Margin: 20% | Markup on cost25% | Price for cost 100125.00 |
| Margin: 25% | Markup on cost33.3% | Price for cost 100133.33 |
| Margin: 30% | Markup on cost42.9% | Price for cost 100142.86 |
| Margin: 40% | Markup on cost66.7% | Price for cost 100166.67 |
| Margin: 50% | Markup on cost100% | Price for cost 100200.00 |
Frequently asked questions
How do you calculate profit margin?
Margin = (selling price − cost) / selling price × 100. An item that costs 80 and sells for 100 makes a profit of 20.00 and a margin of 20%.
What is the difference between margin and markup?
Margin divides the profit by the selling price; markup divides it by the cost. For the same sale they differ: cost 80, price 100 is a 20% margin but a 25% markup. A margin can never reach 100%; a markup can go well beyond it.
How do I find the price for a target margin?
Price = cost / (1 − margin). For a 30% margin on a cost of 80: 80 / 0.70 = 114.29. Adding 30% to the cost instead (104.00) leaves only a 23.1% margin, which is the most common pricing mistake.
Should I include sales tax or VAT?
No. Enter cost and price without sales tax or VAT. The tax is passed on to the government and is not your profit, so including it makes the margin look higher than it is.
What is the difference between gross and net profit margin?
This calculator gives the gross margin: only the cost of the item is deducted. Net margin also deducts rent, wages, shipping, fees and tax, so it is always lower than the gross margin.
Gross profit arithmetic; overheads, discounts, fees and taxes are not included. Results are for guidance only.