Profit Margin Calculator
Find your margin, or the price you need to hit one. Enter what you sell something for and what it costs to see the gross profit and margin. Or enter the cost and the margin you want, and get the price to charge.
How to calculate profit margin
- Gross profit = revenue − cost
- Margin % = gross profit ÷ revenue × 100
- Price for a target margin = cost ÷ (1 − margin %)
- Markup % = gross profit ÷ cost × 100
Example. Selling something for $60 that costs you $40 leaves $20 of gross profit: a 33.3% margin (and a 50% markup). To hit a 40% margin on the same $40 cost, you would need to charge $40 ÷ 0.6 = $66.67.
Margin to markup chart
To price for a margin, divide your cost by the number in the last column, or multiply by the markup.
| Target margin | Markup needed | Price on a $100 cost |
|---|---|---|
| 10% | 11.1% | $111.11 |
| 15% | 17.6% | $117.65 |
| 20% | 25.0% | $125.00 |
| 25% | 33.3% | $133.33 |
| 30% | 42.9% | $142.86 |
| 35% | 53.8% | $153.85 |
| 40% | 66.7% | $166.67 |
| 50% | 100% | $200.00 |
| 60% | 150% | $250.00 |
| 70% | 233.3% | $333.33 |
| 80% | 400% | $500.00 |
Things to know
- This is gross margin: revenue minus the direct cost of what you sold. Net margin also subtracts rent, payroll, software, and every other expense, so it is always lower.
- To price for a target margin, divide by (1 − margin). Adding the margin percentage to the cost gives you a markup and a lower margin than you wanted: $40 + 40% is $56, which is only a 28.6% margin.
- Margin can never reach 100%. If you see a very high margin, check that the cost includes everything: shipping, packaging, card fees, and labor.
- Lenders and investors usually look at margins on your profit and loss statement, so compare like with like when you benchmark.
Frequently asked questions
How do I calculate profit margin?
Subtract the cost from the revenue to get gross profit, divide the profit by the revenue, and multiply by 100. $20 of profit on a $60 sale is a 33.3% margin.
How do I price for a specific margin?
Divide the cost by 1 minus the margin as a decimal. For a 40% margin on a $40 cost: $40 ÷ 0.6 = $66.67.
Is a 50% margin the same as doubling the cost?
Yes. A 50% margin means profit is half the price, so the price is twice the cost. That is the same as a 100% markup.
What is a good profit margin?
It depends heavily on the industry. Grocery stores and restaurants run on thin margins, while software and professional services often run much higher. Compare yourself with businesses like yours rather than a single rule of thumb.
What is the difference between gross and net margin?
Gross margin subtracts only the direct cost of what you sold. Net margin subtracts every expense, including rent, payroll, interest, and taxes. This calculator works out gross margin.
Can profit margin be negative?
Yes. If the cost is higher than the revenue, the margin is negative and every sale loses money.
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Calculators give estimates from the numbers you enter. They are not tax, legal, or accounting advice.