Profit Margin Calculator
Calculate gross profit, profit margin and markup from revenue and cost.
The Profit Margin Calculator tells you how much of every sale you actually keep. Enter your revenue (what the customer pays) and your cost of goods sold (what it costs you to deliver), and it returns the gross profit, the profit margin as a percentage of revenue, and the markup as a percentage of cost.
Margin and markup are constantly confused, and the difference is expensive for small businesses. A 40% margin — keeping 40 cents of every dollar of sales — corresponds to a 66.7% markup on cost. Price wrong and you can believe you are profitable while every sale loses money once overhead lands. This tool makes both numbers explicit so you can check product pricing, supplier deals or service rates in seconds.
Gross figures exclude operating expenses like rent, wages and marketing; your net margin will be lower. All math runs locally in your browser, works in any currency, and updates as you type.
What your customer pays.
What it costs you to deliver.
Gross profit
$600.00
Profit margin
40.00%
profit ÷ revenue
Markup
66.67%
profit ÷ cost
Cost ratio
60.00%
cost ÷ revenue
Margin and markup are often confused: a 40% margin means you keep 40% of the selling price, which corresponds to a 66.7% markup on cost.
How to use the Profit Margin Calculator
- Enter your revenue — the price your customer pays.
- Enter your cost of goods sold — what the product or service costs you.
- Read the gross profit, profit margin percentage and markup percentage.
- Adjust the price in the revenue field to see how margin responds.
- Use the margin figure when comparing products; use markup when setting prices from cost.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price; markup is profit as a percentage of cost. Selling an item that costs $60 for $100 gives a $40 profit — a 40% margin but a 66.7% markup. They are different numbers that describe the same deal from two sides.
What is a good profit margin?
It varies wildly by industry: grocery stores run on thin 1–3% net margins, software companies can exceed 20–30%, and professional services often land in between. Compare against your own industry benchmarks rather than an arbitrary target, and remember gross margin (what this tool shows) is always higher than net margin.
How do I set a selling price to hit a target margin?
If you want a 40% margin, divide your cost by (1 − 0.40): a $60 cost needs a $100 selling price (60 ÷ 0.6). If you instead 'add 40% markup', you only get $84 — a 28.6% margin. Always divide, never multiply, when pricing for a margin target.
What is not included in gross profit?
Operating expenses: rent, salaries, marketing, utilities, software and similar overhead. Gross profit covers only the direct cost of the goods or services sold. Subtract your overhead from gross profit to get net profit, which is what your business actually keeps.
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