Pricing & Profit
Profit Margin Calculator
Calculate profit, profit margin, and markup from your cost and selling price.
Enter your cost and selling price to see how much profit you make and what percentage of each sale you keep.
Enter your values
Your total cost for one item or service.
The amount charged to your customer.
Results
Profit margin
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Enter your cost and selling price to calculate margin.
Profit
—
Selling price less cost.
Markup
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Profit expressed as a percentage of cost.
Results are estimates based on the values entered and are provided for general planning.
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Step by step
How to use the profit margin
- Enter the Cost of one item or service.
- Enter the Selling price you charge for it.
- Read the profit margin, the dollar profit per sale, and the markup on cost.
Method
How to calculate profit margin
Profit margin shows how much of each revenue dollar remains after the cost entered above. Markup compares that same profit with cost instead of revenue.
Formula
Profit = Selling price − Cost Profit margin = Profit ÷ Selling price × 100 Markup = Profit ÷ Cost × 100
Assumptions
- Cost and selling price cover the same unit and period.
- Selling price must be greater than zero; a zero cost has no conventional markup.
- The calculator uses only the cost and selling price entered. Include tax, shipping, payment fees, labor, advertising, overhead, or other operating expenses when you want them reflected.
Calculations retain full JavaScript numeric precision. Currency and percentages display two decimals.
How to interpret the result
A positive margin means price exceeds cost. A zero margin means price equals cost. A negative margin means the item is being sold below the entered cost.
Profit margin formula
Profit margin is the percentage of selling price left after subtracting the cost entered in the calculator. For example, a 25% margin means $25 remains from each $100 of revenue before costs that were not included.
When you enter direct product or service cost, this calculator gives gross profit and gross profit margin. Operating margin and net profit margin use broader income-statement figures, so they require different inputs.
What “cost” means in this calculator
Cost is whatever you enter for one unit or one sale — often the purchase or production cost of the item. The calculator does not add anything you leave out. If shipping, payment fees, packaging, or a share of advertising belongs to each sale, add it to Cost and the margin will reflect it.
Leaving operating costs out can make a product look more profitable than it is. A $100 item with a $60 product cost shows a 40.00% margin, but if $8 of fees and $12 of shipping also go with every sale, the true cost is $80 and the margin is 20.00%.
Dollar profit vs percentage margin
Profit is the dollar amount left from one sale; margin is that amount as a share of the price. The two can point in different directions. A $20 item with $8 profit has a 40.00% margin, while a $500 item with $75 profit has only 15.00% — yet each sale of the second item leaves more dollars.
Use margin to compare items of different prices on the same footing, and dollar profit to see how much each sale actually contributes.
Worked examples: a profitable sale and a loss
Profitable: cost $60, selling price $100. Profit = $100 − $60 = $40. Margin = $40 ÷ $100 × 100 = 40.00%. Markup = $40 ÷ $60 × 100 = 66.67%. The same $40 reads as a larger percentage against cost than against price, which is why margin and markup should never be swapped; the Markup Calculator starts from cost instead.
Loss: cost $100, selling price $80. Profit = −$20 and margin = −$20 ÷ $80 × 100 = −25.00%. A negative margin is a valid result that shows the item is selling below the cost entered, for example during clearance.
How margin changes when price or cost changes
Starting from $60 cost and a $100 price (40.00% margin): raising the price to $110 lifts margin to 45.45%; cutting cost to $55 at the original $100 price lifts it to 45.00%. A $10 price cut to $90 drops margin to 33.33%, a larger fall than the 10% change in price suggests, because the whole reduction comes out of profit.
Edge cases
Cost of $0 with a positive price gives a 100.00% margin — the whole price is profit — and markup shows N/A because markup divides by cost. A selling price of $0 is not accepted: margin divides by price, so there is no meaningful percentage to report.
For totals across a whole period rather than one item, the Gross Profit Calculator uses revenue and cost of goods sold instead.
What is a good profit margin?
There is no universal good profit margin. An appropriate margin varies by industry, product, business model, overhead, sales volume, and competitive environment.
Use margin to compare products or periods only when costs are defined consistently. A higher margin is not automatically better if it reduces demand, while a lower margin may be sustainable when volume and operating costs support it.
Profit margin vs. markup
Profit margin compares profit with selling price. Markup compares profit with cost. For a $75 cost and $120 selling price, $45 profit equals a 37.50% margin and a 60.00% markup.
| Measure | Formula | What it shows |
|---|---|---|
| Profit | Selling price − Cost | The currency amount left after the entered cost. |
| Profit margin | Profit ÷ Selling price × 100 | Profit as a percentage of revenue. |
| Markup | Profit ÷ Cost × 100 | Profit as a percentage of cost. |
Frequently asked questions
Which calculator do you need?
- Know your cost and target margin but not the price? Work backward with the Selling Price Calculator.
- Want to express the same price as a markup on cost instead of a margin? Use the Markup Calculator.
- Need the sales volume where profit actually starts? Try the Break-Even Calculator.
- Mixing up margin and markup? Read Markup vs Margin.
Keep calculating
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