Profit Margin Calculator
Calculate gross profit, profit margin, and markup from revenue and cost — with a plain-English explanation of margin vs. markup.
Enter your revenue (selling price) and cost. The calculator returns gross profit, your profit margin as a share of revenue, and your markup as a percentage added to cost. A short explainer with a concrete example clarifies the margin-versus-markup confusion that trips up many small-business owners.
How to use this calculator
- Step 1: Enter your revenue — the total selling price.
- Step 2: Enter your cost — what you paid to produce or buy what you sold.
- Step 3: Click Calculate to see gross profit, profit margin %, and markup %.
- Step 4: Read the margin-vs-markup explainer to make sure you are pricing with the right one.
The formula
Gross profit = revenue − cost; Margin % = gross profit / revenue × 100; Markup % = gross profit / cost × 100
Worked example
Revenue of $2,000 with a cost of $1,250 gives a gross profit of $750.00, a profit margin of 37.50% (profit as a share of the selling price), and a markup of 60.00% (profit added on top of cost).
Frequently Asked Questions
What is the difference between margin and markup?
Margin is the share of the selling price you keep: profit divided by revenue. Markup is what you add on top of cost: profit divided by cost. Buy for $100, sell for $150, profit $50: margin is 50/150 = 33.33%, markup is 50/100 = 50%. Same profit, two different percentages.
Can profit margin be over 100%?
No. Since margin is profit divided by revenue, it can never exceed 100% (you cannot keep more than the full selling price). Markup, however, has no upper limit — a $10 item sold for $100 has a 900% markup and a 90% margin. Confusing the two is how pricing mistakes happen.
What is a good profit margin?
It depends heavily on the industry. Grocery stores run 1–3%, restaurants 3–5%, software companies 70–90% on gross margin. Compare against businesses like yours rather than a universal number. Track your margin over time — a shrinking margin often signals rising costs before they become a crisis.
How do I price a product to hit a target margin?
Use the markup side of this calculator or the dedicated markup calculator: price = cost / (1 − target margin). To hit a 40% margin on a $60 cost, price = 60 / 0.6 = $100. Working backward from the margin target is more reliable than picking a markup and hoping.