Profit Margin Calculator
Profit margin from a cost and a price, the price needed for a target margin, or the most an item may cost.
Your product
Filled in with example values. Replace them with your own.
Currency symbol
Results update as you type.
Result
Cost $60.00, price $100.00: profit $40.00, margin 40%, markup 66.67%
Profit margin
40%
- Selling price
- $100.00
- Cost
- $60.00
- ProfitPer item
- $40.00
- MarkupProfit as a share of the cost
- 66.67%
Where the price goes
- Cost
- $60.00
- Profit
- $40.00
- Selling price
- $100.00
How it’s calculated
Profit
$100.00 − $60.00 = $40.00
Margin
$40.00 ÷ $100.00 = 40%
Markup
$40.00 ÷ $60.00 = 66.67%
How the profit margin calculator works
Profit margin is the share of the selling price that is profit. The calculator answers three related questions: what margin you make at a given cost and price, what to charge to reach a target margin, and the most a product may cost if you want to keep a margin at a fixed price.
Every result also shows the markup, so you can compare the two without mixing them up.
The formula
Margin = (Price − Cost) ÷ Price
Price = Cost ÷ (1 − Margin)
Cost = Price × (1 − Margin)
Worked examples
- Cost 60, price 100: profit 40, margin 40 ÷ 100 = 40%, markup 40 ÷ 60 = 66.67%.
- Cost 45, target margin 35%: 45 ÷ 0.65 = 69.2308, so charge 69.24 (a 35.01% margin).
- Price 19.99, target margin 35%: 19.99 × 0.65 = 12.9935, so the item may cost at most 12.99.
Assumptions and limitations
- The margin is on the cost you enter. Overheads, shipping, payment fees and returns are only included if you add them to the cost.
- Prices exclude sales tax, VAT or GST.
- Prices are rounded up and costs rounded down to the cent, so the target margin is always met.
Frequently asked questions
What is the difference between margin and markup?
Both describe the same profit. Margin divides it by the selling price; markup divides it by the cost. An item that costs 60 and sells for 100 has a 40% margin and a 66.67% markup. The Markup Calculator works from the cost side.
Is this gross margin or net margin?
It is the margin on whatever cost you enter. Enter the cost of the product alone for a gross margin. To include a share of overheads, add it to the cost first.
Why is the price rounded up?
Prices are set in whole cents. Rounding up keeps the margin at or just above your target; rounding down could leave it slightly short. For the same reason the highest cost is rounded down.
Can a margin be 100% or more?
Only if the item costs nothing. A margin is profit as a share of the price, so it can never exceed 100%. A markup has no such limit.
Should the price include sales tax or VAT?
No. Use the price you keep, before any sales tax, VAT or GST is added, because the tax is passed on to the government and is not part of your profit.