Profit Margin Calculator

What this tool does

The Profit Margin Calculator converts between cost, selling price, margin and markup. Enter cost and price to see both percentages, or enter a target margin or markup to get the price to charge, with totals for any number of units sold.

Margin and markup both describe profit, but against different bases. Margin is profit as a share of the selling price; markup is profit as a share of cost. An item that costs 600 and sells for 1,000 has a 40% margin but a 66.7% markup. Mixing the two up is a classic pricing mistake: adding a 40% markup to cost gives only a 28.6% margin, which may not cover overheads.

The calculator uses margin = (price − cost) ÷ price and markup = (price − cost) ÷ cost. To hit a target margin it sets price = cost ÷ (1 − margin), and for a markup price = cost × (1 + markup). Enter the number of units to see total revenue and profit. These are gross figures before overheads, tax and other operating costs.

How to use Profit Margin Calculator

1. Choose what you know: cost and price, cost and target margin, or cost and markup.
2. Pick the currency and enter the cost per unit.
3. Enter the selling price, the target margin or the markup.
4. Enter how many units you expect to sell.
5. Read the margin, markup, selling price and profit per unit and in total.

Tips for better results

• Include shipping, packaging and payment fees in the cost to see your real margin.
• Retail and online marketplaces usually quote commission on price, so think in margins when listing.
• A small change in price has a large effect on profit when margins are thin.
• Compare your margin with industry norms; groceries run on low margins, software and services on high ones.

Common use cases

• Setting prices for products in a shop or e-commerce store.
• Checking a supplier’s quote against your target margin.
• Converting a wholesaler’s markup into a margin for reporting.
• Preparing a quotation for freelance or contract work.

Common mistakes to avoid

• Using markup and margin as if they were the same percentage.
• Leaving overheads out and treating gross margin as net profit.
• Setting a target margin of 100% or more, which is impossible unless the cost is zero.