Profit margin and markup calculator

How to use the profit margin calculator

Margin and markup describe the same profit from two angles. Margin is profit as a share of the selling price. Markup is profit as a share of the cost. A product that costs 60 and sells for 100 has a 40% margin and a 66.67% markup.

If you already have both prices, choose the first option. If you are setting a price, choose a target margin or markup and the calculator gives the selling price.

The formula

• Profit = selling price − cost
• Margin = profit ÷ selling price × 100
• Markup = profit ÷ cost × 100
• Price for a target margin: cost ÷ (1 − margin ÷ 100)

Worked example

You buy an item for 60 and want a 40% margin. The price is 60 ÷ (1 − 0.40) = 100. Adding 40% to the cost instead would give 84, which is only a 28.6% margin.

Results are estimates for planning. They are not financial advice, and a lender’s own figures may differ because of fees and rounding.

Common questions

Why is markup always bigger than margin?

Both use the same profit, but markup divides it by the cost and margin divides it by the larger selling price.

What is a good profit margin?

It depends heavily on the industry. Grocery shops run on a few percent, and software companies often keep more than half of each sale.

Is this gross or net margin?

Gross margin, if the cost you enter is only what you paid for the item. Include overheads in the cost to get closer to net margin.