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Profit and margin

Profit Margin Calculator

Calculate profit and profit margin as a percentage of selling price, and see the equivalent markup.

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Your figures

$

The price the customer pays, excluding any tax you will add later.

$

What the item or service cost you.

Results update as you type. * required

What this calculator does

Profit margin expresses profit as a percentage of the selling price. It answers a simple question: of every 100 the customer pays, how much is left after the cost of the item?

Because margin uses price as its base, it is the right measure for comparing profitability across products and services with very different prices.

How the calculation works

The calculator subtracts cost price from selling price to find the profit amount. It then divides that profit by the selling price and multiplies by 100 to express it as a percentage.

It also shows the equivalent markup, which divides the same profit by the cost price. Both figures describe the same sale from different starting points.

Worked example: A product sold at 250 with a cost of 150

  1. 1Profit: 250.00 − 150.00 = 100.00
  2. 2Margin: (100.00 ÷ 250.00) × 100 = 40%
  3. 3Equivalent markup: (100.00 ÷ 150.00) × 100 = 66.67%

The sale has a 40% profit margin, which is the same as a 66.67% markup on cost.

Common mistakes

  • Adding a desired margin to the cost price. A 40% margin is not cost plus 40%; it is price × 0.40 profit, which needs cost ÷ 0.60.
  • Reporting markup as margin, which overstates profitability.
  • Calculating margin on revenue that includes sales tax, which inflates both revenue and margin.
  • Ignoring delivery and payment fees, which belong in cost when measuring real margin.

Frequently asked questions

Is profit margin the same as markup?
No. Margin is profit divided by selling price; markup is profit divided by cost. A 40% margin equals a 66.67% markup, so the same sale produces two different percentages.
What is a good profit margin?
It depends on the industry and business model. Service businesses often carry higher margins than retail, where stock, shipping and returns absorb more of the price. Compare against your own history and your sector rather than a single universal target.
How do I price for a target margin?
Divide cost by one minus the target margin as a decimal. For a 40% target margin on a cost of 150, calculate 150 ÷ 0.60 = 250.
Can profit margin be more than 100%?
Not when it is calculated on selling price. Profit cannot exceed the price itself unless costs are negative, which would indicate a refund or credit rather than a sale.

Disclaimer: this calculator provides general estimates for planning. It is not accounting, tax, legal or financial advice. Confirm important figures with a qualified professional in your jurisdiction.