Margin Calculator
This tool is a profit margin calculator that computes margin, markup, and profit from cost and selling price. Switch to the second tab to reverse-calculate the selling price needed for a target margin.
Margin vs Markup — Quick Reference
The same dollar profit produces different margin and markup percentages. This table shows common equivalents.
| Scenario | Margin | Markup |
|---|---|---|
| Cost $80 → Price $100 | 20.0% | 25.0% |
| Cost $75 → Price $100 | 25.0% | 33.3% |
| Cost $66.67 → Price $100 | 33.3% | 50.0% |
| Cost $60 → Price $100 | 40.0% | 66.7% |
| Cost $50 → Price $100 | 50.0% | 100.0% |
Formulas
Margin % = (Profit ÷ Selling Price) × 100
Markup % = (Profit ÷ Cost) × 100
Selling Price = Cost ÷ (1 − Margin ÷ 100)
Margin → Markup: Markup = Margin ÷ (1 − Margin)
Markup → Margin: Margin = Markup ÷ (1 + Markup)
Frequently Asked Questions
What is profit margin?
Profit margin is the percentage of revenue that remains as profit after subtracting costs. It is calculated as (Selling Price − Cost) ÷ Selling Price × 100. A 40% margin means $0.40 of every dollar in revenue is profit.
What is the difference between margin and markup?
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. For example, if cost is $60 and selling price is $100, profit is $40. Margin is 40% ($40 ÷ $100) and markup is 66.7% ($40 ÷ $60). The same dollar profit always produces a higher markup percentage than margin percentage.
How do I calculate selling price from a target margin?
Use the formula: Selling Price = Cost ÷ (1 − Target Margin ÷ 100). For example, if your cost is $60 and you want a 40% margin, the selling price is $60 ÷ (1 − 0.40) = $100. Use the "Cost & Target Margin → Price" tab above to calculate this automatically.
What is a good profit margin?
Profit margins vary widely by industry. Grocery and retail often operate at 2–5% net margin. Software and services can reach 20–40% or higher. Manufacturing typically falls in 5–15%. There is no universal "good" margin — it depends on the industry, business model, and operating costs.
Why is my markup higher than my margin?
Markup is always higher than margin for the same transaction because they use different denominators. Margin divides profit by the larger number (selling price), while markup divides profit by the smaller number (cost). A 50% markup equals a 33.3% margin; a 100% markup equals a 50% margin.
How do I convert margin to markup?
Markup = Margin ÷ (1 − Margin). Use decimal form. For example, a 40% margin (0.40) converts to 0.40 ÷ 0.60 = 0.667, or 66.7% markup. To go the other way: Margin = Markup ÷ (1 + Markup).
Can profit margin be negative?
Yes. A negative margin means you are selling below cost — every sale loses money. This can happen intentionally (loss leaders, market entry pricing) or by mistake (underpricing). The calculator will show negative values so you can identify this immediately.
What is gross margin vs net margin?
Gross margin considers only the direct cost of goods sold (COGS). Net margin subtracts all expenses — rent, salaries, taxes, interest, etc. — from revenue. This calculator computes gross margin. Net margin requires a full income statement.
Privacy & Limitations
- All calculations run entirely in your browser -- nothing is sent to any server.
- Results are estimates for planning purposes and should not replace professional financial advice.
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Margin Calculator FAQ
What is profit margin?
Profit margin is the percentage of revenue that remains as profit after subtracting costs. It is calculated as (Selling Price − Cost) ÷ Selling Price × 100. A 40% margin means $0.40 of every dollar in revenue is profit.
What is the difference between margin and markup?
Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost. For example, if cost is $60 and selling price is $100, profit is $40. Margin is 40% ($40 ÷ $100) and markup is 66.7% ($40 ÷ $60). The same dollar profit always produces a higher markup percentage than margin percentage.
How do I calculate selling price from a target margin?
Use the formula: Selling Price = Cost ÷ (1 − Target Margin ÷ 100). For example, if your cost is $60 and you want a 40% margin, the selling price is $60 ÷ (1 − 0.40) = $100.
What is a good profit margin?
Profit margins vary widely by industry. Grocery and retail often operate at 2–5% net margin. Software and services can reach 20–40% or higher. Manufacturing typically falls in 5–15%. There is no universal 'good' margin — it depends on the industry, business model, and operating costs.
Why is my markup higher than my margin?
Markup is always higher than margin for the same transaction because they use different denominators. Margin divides profit by the larger number (selling price), while markup divides profit by the smaller number (cost). A 50% markup equals a 33.3% margin; a 100% markup equals a 50% margin.
How do I convert margin to markup?
Markup = Margin ÷ (1 − Margin). Use decimal form. For example, a 40% margin (0.40) converts to 0.40 ÷ 0.60 = 0.667, or 66.7% markup. To go the other way: Margin = Markup ÷ (1 + Markup).
Can profit margin be negative?
Yes. A negative margin means you are selling below cost — every sale loses money. This can happen intentionally (loss leaders, market entry pricing) or by mistake (underpricing). The calculator will show negative values so you can identify this immediately.
What is gross margin vs net margin?
Gross margin considers only the direct cost of goods sold (COGS). Net margin subtracts all expenses — rent, salaries, taxes, interest, etc. — from revenue. This calculator computes gross margin. Net margin requires a full income statement.