Profit Margin Calculator
Enter your cost and selling price to instantly see your profit, gross margin percentage, and markup percentage — two related but different numbers that are easy to confuse when pricing a product.
How the Profit Margin formula works
Margin and markup are calculated from the same two numbers but divide by different bases:
Profit = Revenue − Cost Margin% = (Profit / Revenue) × 100 Markup% = (Profit / Cost) × 100
Step-by-step calculation
- Subtract cost from revenue to find the profit amount.
- Divide profit by revenue and multiply by 100 to get margin percentage.
- Divide profit by cost and multiply by 100 to get markup percentage.
Worked example
A product costs $40 to make and sells for $60: Profit = $60 − $40 = $20. Margin = 20/60 × 100 ≈ 33.3%. Markup = 20/40 × 100 = 50%. Note margin and markup are different numbers from the same $20 of profit.
Frequently asked questions
What's the actual difference between margin and markup?
Margin expresses profit as a percentage of the selling price (revenue), while markup expresses it as a percentage of the cost. They'll always differ unless profit is zero, and mixing them up is a common pricing mistake.
What's considered a 'good' profit margin?
It varies widely by industry — software and services often run 60–80% margins, while grocery and retail often run in the single digits to low teens. Compare against your specific industry's typical range rather than a universal benchmark.
Should shipping and payment processing fees be included in cost?
For an accurate margin, include every cost directly tied to fulfilling the sale — materials, shipping, and transaction fees — not just the base product cost, or your margin will look better than it actually is.