Profit Margin Calculator
This profit margin calculator turns a cost and a selling price into the three numbers every seller needs: the profit per unit, the profit margin, and the markup. Enter what a product costs you and the price you charge, and it instantly returns how much you make and both key percentages. It is an essential tool for pricing products, comparing suppliers, setting discounts, and understanding how healthy each sale really is, whether you run an online shop, a restaurant, or a service business.
Profit
Margin (on price)
Markup (on cost)
Margin is calculated on the selling price (profit ÷ price), while markup is calculated on the cost (profit ÷ cost). That is why, for the same product, markup is always higher than margin.
Publicidad
How it works
The profit is simply the selling price minus the cost. From there, two different percentages describe the same sale. The profit margin is the profit divided by the selling price, so it answers "what share of the price I charge is profit?" — with a cost of 80 and a price of 100, the profit is 20 and the margin is 20 ÷ 100 = 20%. The markup (or mark-up) is the profit divided by the cost, so it answers "how much do I add on top of what it costs me?" — the same sale has a markup of 20 ÷ 80 = 25%. Because the price is always larger than the cost, the markup is always the higher of the two percentages, and confusing them is one of the most common pricing mistakes.
Publicidad
Preguntas frecuentes
- What is the difference between margin and markup?
- Both measure the profit on a sale, but against a different base. Margin is the profit as a percentage of the selling price (profit ÷ price), while markup is the profit as a percentage of the cost (profit ÷ cost). For a cost of 80 and a price of 100, the profit is 20, the margin is 20%, and the markup is 25%. Markup is always higher than margin for the same product because the cost is smaller than the price.
- How do I use markup to set a price?
- Multiply your cost by one plus the markup as a decimal. With a cost of 80 and a target markup of 25%, the price is 80 × 1.25 = 100. Markup is intuitive for pricing because you start from what the item costs you and add a fixed percentage on top.
- How do I set a price from a target margin?
- Divide your cost by one minus the target margin as a decimal. If your cost is 80 and you want a 20% margin, the price is 80 ÷ (1 − 0.20) = 80 ÷ 0.80 = 100. Margins are useful when you plan around the share of revenue that stays as profit rather than the amount added to cost.
- What is a good profit margin?
- It depends heavily on the industry. Grocery and retail often run on thin margins of a few percent, restaurants might target 10–15%, while software and digital products can exceed 70–80%. Compare your margin to typical figures for your sector rather than to an absolute number, and remember this calculator shows gross margin, before fixed costs like rent, salaries, and taxes.
- Can the margin be negative?
- Yes. If your selling price is lower than your cost, the profit is negative and so are both the margin and the markup, which means you lose money on every sale. This often happens with aggressive discounts or loss leaders. The calculator will show the negative figures so you can see exactly how much each sale costs you.