How to use the Profit Margin Calculator
- Choose whether you know the selling price or a target margin.
- Enter your cost per item.
- Enter the selling price (or target margin).
- Read the margin, profit and markup.
What does this tool do?
Gross margin is profit as a percentage of the selling price. It tells you how much of each sale you keep after paying for the product itself. Markup is profit as a percentage of cost.
Pricing for a target margin is a common stumbling block: to make a 40% margin on a $60 item you need to charge $100, not $84.
Why use it?
- Price products confidently.
- See margin and markup side by side so they're never confused.
- Check whether a discount still leaves you profitable.
Margin vs markup
An item costs $60 and sells for $100. Profit is $40. Margin = 40 ÷ 100 = 40%. Markup = 40 ÷ 60 = 66.7%.
| Margin | Equivalent markup |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 25% | 33.3% |
| 33.3% | 50% |
| 40% | 66.7% |
| 50% | 100% |
The formula
Privacy
The calculation happens instantly in your browser. The numbers you enter are not sent to our servers or saved. There's no account to create and nothing to install.
Frequently asked questions
What's a good profit margin?
It depends heavily on the industry. Grocery stores may run on low single-digit net margins, while software can exceed 70% gross margin. Compare yourself with businesses like yours.
What's the difference between gross and net margin?
Gross margin subtracts only the cost of the product itself. Net margin also subtracts overheads like rent, wages, marketing and tax, so it's always lower and shows what the business actually keeps.
Last reviewed by the M2Toolkit team.