Profit Margin Calculator
Work out profit, profit margin and markup from a cost and a selling price.
Profit margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. The two numbers are different on purpose — a 50% markup is not the same as a 50% margin.
What this calculator does
This calculator compares what something costs you with the price you charge. It shows the money left after direct cost, the profit margin as a share of selling price, and markup as a share of cost.
How to use it
- Enter the direct cost of the product or work.
- Enter the selling price you plan to charge.
- Use the results to check whether the price leaves enough room for your goals and other expenses.
Margin and markup are different
Profit is selling price minus cost. Margin is profit divided by selling price. Markup is profit divided by cost.
For example, when cost is 80 and price is 100, profit is 20, margin is 20%, and markup is 25%.
How to interpret the result
A positive margin means the selling price is above the cost you entered. It does not automatically mean the sale is profitable overall: rent, software, labour, returns, payment fees, and tax can matter too.
Common mistakes
- Treating a 50% markup as a 50% margin.
- Leaving out delivery, payment, or labour costs.
- Comparing prices that include tax with costs that do not.
Limitations
The calculator is a pricing aid, not accounting software. Use consistent cost and price assumptions, and consider your indirect costs separately.
Can a margin be negative?
Yes. If the selling price is lower than the cost you enter, the result is a loss and the margin is negative.
Should tax be included?
Use a consistent basis. If you are comparing commercial profitability, many businesses compare price and cost before taxes that are collected for a tax authority; your own accounting treatment may differ.
Check a sale reduction with the Discount Calculator, add a tax percentage with the VAT Calculator, or put your final price on an invoice.