Profit Margin Calculator
Margin, markup and profit from cost and price, or the price for a target margin.
How to use Profit Margin Calculator
- Choose what you know: cost and price, or cost and a target.
- Enter the numbers.
- Read profit, margin and markup together.
How it works
Margin is profit as a share of the selling price: (price − cost) ÷ price. Markup is profit as a share of the cost: (price − cost) ÷ cost. They describe the same profit differently, which is why a 50% markup is only a 33.3% margin.
To price for a target margin, divide the cost by (1 − margin): a cost of 60 with a 40% margin needs a price of 100. Margin can never reach 100%, because that would require a cost of zero.
Example
Cost 60, price 100: profit 40, margin 40%, markup 66.7%.
Frequently asked questions
What is the difference between margin and markup?
Both use the same profit. Margin divides it by the price; markup divides it by the cost. Margin is always the smaller number.
What is a good profit margin?
It depends heavily on the industry: grocery retail often runs on low single-digit net margins, while software can have gross margins above 70%. Compare with businesses like yours.
Is this gross or net margin?
Gross margin, based on the direct cost you enter. Net margin also subtracts overheads, tax and interest.
Does it include VAT?
No. Use prices without VAT; see the VAT calculator to remove it first.
Limitations
- Gross margin only.
- Use prices excluding VAT/sales tax for correct results.
Last reviewed November 9, 2026. How we build and test tools.