Profit Margin Calculator
By Santaji GadepatilinUpdated October 27, 2026
Profit margin is profit as a percentage of revenue. It shows how much of each sale a business keeps after costs.
Profit margin (%) vs Selling price (revenue) — other inputs held at your current values.
How to use the profit margin calculator
Enter the cost and selling price to see your profit, margin and markup. To set a price, press × on Selling price and type the margin (or markup) you want.
Profit margin formulas
profit = price − cost margin = profit ÷ price markup = profit ÷ cost
Worked example
You buy a product for 60 and sell it for 100.
- Profit = 100 − 60 = 40
- Margin = 40 ÷ 100 = 40%
- Markup = 40 ÷ 60 = 66.7%
Margin vs markup table
| Markup | Equals margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 200% | 66.7% |
Mixing these up is a common pricing mistake. If you want a 50% margin but add a 50% markup, your actual margin is only 33.3%.
Price needed for a target margin (cost 60)
| Target margin | Selling price | Equivalent markup |
|---|---|---|
| 10% | 66.67 | 11.1% |
| 20% | 75.00 | 25.0% |
| 30% | 85.71 | 42.9% |
| 40% | 100.00 | 66.7% |
| 50% | 120.00 | 100.0% |
| 60% | 150.00 | 150.0% |
Price = Cost ÷ (1 − margin)
Typical margins by industry
| Industry | Typical net margin |
|---|---|
| Grocery retail | 1–3% |
| Restaurants | 3–9% |
| Manufacturing | 5–10% |
| Professional services | 10–20% |
| Software | 15–30% |
Gross margins are much higher than net margins, because net margin also subtracts rent, salaries, marketing and taxes.
Margin with GST or VAT
Calculate margin on prices before tax. Sales tax is collected for the government and is not revenue. If your selling price includes 18% tax, divide it by 1.18 first, or use the GST calculator.
Common mistakes
- Pricing with margin but thinking in markup. A 50% markup is only a 33% margin.
- Forgetting discounts and returns. A 10% sale cuts a 30% margin to about 22%.
- Leaving out shipping and payment fees from cost, which can quietly erase thin margins.
Gross vs net margin
This calculator gives gross margin — selling price minus the direct cost of the item. Net margin also subtracts overheads such as rent, salaries, marketing and tax. To estimate net margin, include those costs in the Cost field.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. Buying at 60 and selling at 100 gives a 40% margin but a 66.7% markup.
How do I set a price for a target margin?
Price = cost ÷ (1 − margin). For a 40% margin on a cost of 60, the price is 60 ÷ 0.6 = 100. Press × on Selling price and type the margin.
Can a margin be over 100%?
No. Margin can approach but never reach 100%. Markup has no upper limit.
What is a good profit margin?
It varies widely by industry. As a rough guide, a net margin of 10% is healthy for many small businesses, 20% is high, and under 5% is thin.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup gives a margin of 0.5 ÷ 1.5 = 33.3%.