Margin Calculator
Calculate profit margin and markup from cost and revenue — the two are not the same. Enter your numbers to see the profit, the margin and the markup side by side, or work backwards from a target margin to the price you need.
Margin vs. markup (they are not the same)
Margin and markup both describe the profit on a sale, but they measure it against different bases — mixing them up is the most common pricing mistake. Margin is profit as a share of the revenue; markup is profit as a share of the cost. Because revenue is always larger than cost, the margin percentage is always smaller than the markup percentage for the same sale. This calculator shows both side by side.
margin % = (revenue − cost) ÷ revenue × 100, markup % = (revenue − cost) ÷ cost × 100
| Markup | Equivalent margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
For example, a $60 cost sold for $100 is $40 profit — a 40% margin but a 66.7% markup. If you price by markup, use the markup calculator; to work backwards from a target margin to the price you need, switch the mode above to “I want a target margin.”
Gross, operating and net margin
“Profit margin” comes in layers. Gross margin — what this page calculates — is revenue minus the cost of goods sold, divided by revenue. Operating margin subtracts operating expenses like rent and payroll, and net margin subtracts everything, including tax and interest, to show the bottom-line profit. Each is smaller than the one above it. Use gross margin to price individual products, and net margin to judge the whole business.
Planning the numbers behind a product? Pair this with the break-even calculator to find the volume that covers your fixed costs, and the ROI calculator to measure the return on what you invest.
Frequently asked questions
How do I calculate profit margin?
Profit margin is profit as a percentage of revenue: margin % = (revenue − cost) ÷ revenue × 100. If you sell for $100 and it cost $60, the profit is $40 and the margin is 40 ÷ 100 = 40%. Enter your cost and revenue above and the calculator shows the margin, the markup and the profit.
What is the difference between margin and markup?
Both use the same profit, but measure it against different bases. Margin is profit ÷ revenue; markup is profit ÷ cost. A 50% markup on a $60 cost gives a $90 price with $30 profit — which is a 33.3% margin, not 50%. Confusing the two is the most common pricing mistake, so this calculator shows both.
What is a good profit margin?
It depends heavily on the industry — grocery and retail often run on single-digit net margins, while software can exceed 70%. As a rough guide, a 10% net margin is considered average, 20% is healthy and 5% is low. Compare against typical margins for your sector rather than an absolute number.
What is gross margin?
Gross margin is revenue minus the cost of goods sold (COGS), divided by revenue — it measures profit before operating expenses, tax and interest. This calculator computes that gross figure from your cost and revenue; operating and net margin subtract further costs further down the income statement.