Profit Margin Calculator
Enter cost and selling price to see margin, markup, and profit side-by-side. Price your products with confidence.
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How this works
Profit = Selling Price − Cost Margin = (Profit ÷ Selling Price) × 100 Markup = (Profit ÷ Cost) × 100Margin and markup both measure profit but from different bases. Margin is profit as a percentage of the selling price (what the customer pays). Markup is profit as a percentage of the cost (what you paid). They are not the same number — and confusing them is a common pricing mistake.
Examples
Retail: $60 cost, $100 price
Profit = 100 − 60 = $40. Margin = 40 ÷ 100 = 40%. Markup = 40 ÷ 60 = 66.67%. For every dollar in revenue, 40 cents is profit. For every dollar you spent on cost, you made 66.67 cents back.
Freelance pricing: $25/hr cost, $75/hr rate
Profit per hour = $50. Margin = 50 ÷ 75 = 66.67%. Markup = 50 ÷ 25 = 200%. Freelancers often quote their rate at a 3x multiple of their fully-loaded hourly cost to net roughly 66% margin.
Thin-margin grocery item
Can of beans costs $0.85, sold for $0.95. Profit = $0.10. Margin = 10.53%. Markup = 11.76%. Grocery is a high-volume, thin-margin business — 1–3% net margin is typical for supermarket chains.
SaaS subscription
Hosting cost per user is $2/mo, subscription price is $20/mo. Profit = $18. Margin = 90%. Markup = 900%. Software businesses run high gross margins because the marginal cost of one more user is near zero.
Common questions
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. For a $60 cost item sold at $100, margin is 40% and markup is 66.67%. Margin is always smaller than markup when both are positive. Margin answers "what share of revenue is profit?" Markup answers "how much did we mark up from cost?"
To hit a target margin %, divide your cost by (1 − target margin). For a $60 cost and 40% target margin: 60 ÷ (1 − 0.40) = 60 ÷ 0.60 = $100 selling price. Double-checking: 40 profit ÷ 100 price = 40% margin.
It varies wildly. Grocery: 1–3% net margin. Retail apparel: 5–15%. Restaurants: 3–9%. Construction: 2–6%. SaaS: 70–90% gross, but 10–20% net after sales and marketing. Healthcare, legal services: 15–25%. Compare to peers in your specific sub-industry rather than a generic average.
Gross margin — the difference between selling price and direct cost of goods sold (COGS). Net margin is what remains after subtracting operating expenses, rent, salaries, taxes, etc. For a full P&L analysis you need to deduct those too; this calculator is for quick per-unit pricing decisions.
Yes, when you sell below cost. Startups sometimes do this intentionally to acquire customers. The calculator displays negative margin in red so the loss is obvious — useful for quickly flagging unprofitable SKUs or promos.
Enter your effective per-unit cost after the volume discount. If you buy 1,000 units at $8 each (total $8,000), your per-unit cost is $8. If you pay an additional $500 in shipping, your fully-loaded per-unit cost is $8.50. Use the fully-loaded number for the most accurate margin.