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Profit Margin

Profit margin is the single most important number for any business — it tells you how many cents of every dollar in revenue you actually keep. Our profit margin calculator handles all three variants: gross margin (revenue minus cost of goods), operating margin (after overhead), and net margin (after tax). It also works in reverse: give it your cost and target margin and it calculates the selling price you need to charge.

$

How much it costs you to produce or buy the item/service.

$

The final price you are charging your customer.

Calculate Selling Price by Target Margin

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%
Required Selling Price:

Gross Profit Margin

Gross Profit
Markup Percentage
Cost
Revenue

Margin vs. Markup: What's the Difference?

The most common mistake business owners make is confusing profit margin with markup. While both are used to measure profitability, they are calculated differently and give you different insights.

Profit Margin

Margin is based on your Revenue. It tells you how much of every dollar earned is kept as profit.

Margin = (Profit ÷ Revenue) × 100

Markup

Markup is based on your Cost. It tells you how much you added to the original cost to get the selling price.

Markup = (Profit ÷ Cost) × 100
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About the Profit Margin Calculator

Profit margin is the single most important number for any business — it tells you how many cents of every dollar in revenue you actually keep. Our profit margin calculator handles all three variants: gross margin (revenue minus cost of goods), operating margin (after overhead), and net margin (after tax). It also works in reverse: give it your cost and target margin and it calculates the selling price you need to charge.

How to use it

  1. Enter revenue (selling price) and cost. See gross profit and margin instantly.
  2. Or enter cost and target margin percentage — the calculator returns the required selling price.
  3. Toggle to markup mode if your pricing starts from a cost-plus markup rather than a margin target.

Formula & methodology

Gross profit = Revenue − COGS. Gross margin % = (Gross profit / Revenue) × 100. Markup % = (Gross profit / COGS) × 100. Note: a 50% markup ≠ a 50% margin (they are always different numbers).

Common use cases

  • Setting product prices for an e-commerce store
  • Analyzing which product lines are most profitable
  • Comparing margin against industry benchmarks
  • Negotiating cost with suppliers to hit margin targets
  • Pitching profitability to investors

Frequently asked questions

Margin is profit as a percentage of revenue. Markup is profit as a percentage of cost. A product that costs $60 and sells for $100 has a 40% margin but a 66.7% markup. They are never equal (unless both are zero).
Depends entirely on the industry. Software: 70–90% gross margin. Retail: 25–50%. Restaurants: 3–9% net margin. Compare to your industry average, not a generic benchmark.
Either raise prices (check elasticity first), reduce cost of goods (negotiate with suppliers, find alternatives), or reduce overhead. Usually a combination of all three is most effective.

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