Profit Margin Calculator
Turn cost and revenue into gross margin, markup and profit per unit — and work backwards from a target margin to the price you need to charge.
Your details
Used when solving for margin.
Used when solving for price.
Advanced options
Result
Gross margin
- Selling price
- $100
- Markup on cost
- 150.00%
- Profit per unit
- $60.00
- Total revenue
- $100
- Total profit
- $60.00
- A 60% margin is a 150% markup. Margin is measured against the selling price, markup against the cost — they are never the same number.
The formula
margin = (price − cost) ÷ price markup = (price − cost) ÷ cost- price
- Selling price per unit
- cost
- Cost of goods sold per unit
The two formulas differ only in the denominator, and that is the whole point. Margin divides profit by the selling price, so it can never reach 100%. Markup divides by the cost, so it has no upper limit. A product bought for $40 and sold for $100 carries a 60% margin and a 150% markup — the same transaction described two ways. To hit a target margin, divide cost by (1 − margin).
Frequently asked questions
What is the difference between margin and markup?
Both measure the same profit, against different bases. Margin is profit as a percentage of the selling price; markup is profit as a percentage of the cost. Buy at $40, sell at $100: profit is $60, which is 60% of the $100 price (margin) and 150% of the $40 cost (markup). Confusing them is how businesses accidentally underprice — applying a '60% markup' when you meant a 60% margin gives you a price of $64 instead of $100.
How do I price for a specific margin?
Divide the cost by one minus the margin. For a 40% margin on a $30 item: 30 ÷ (1 − 0.40) = $50. Do not multiply by 1.40, which gives $42 and a margin of only 28.6%. Switch the calculator to 'Price from target margin' and it does this for you.
Is gross margin the same as net profit?
No. Gross margin covers only the direct cost of goods sold. Net profit comes after rent, salaries, marketing, software, tax and everything else. A healthy gross margin can still accompany a net loss, which is why a gross margin figure alone never tells you whether a business is viable.
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