Calculators
Profit Margin Calculator
Calculate profit margin, markup, and target-margin selling price.
Compare profit margin with markup from unit cost and selling price, then calculate the selling price needed for a target gross margin. Values are currency-neutral as long as cost and price use the same currency.
Profit per unit
40
Gross margin: 40%
Markup on cost: 66.6667%
Selling price for 40% target margin
100
Based on the same entered unit cost. This does not add tax, fees, discounts, overhead, or other costs unless you include them in the cost input.
Margin and markup use different denominators: margin divides profit by selling price, while markup divides profit by cost. This calculator is a general arithmetic aid, not accounting, tax, pricing, or financial advice.
About This Tool
Calculate the relationship between cost, selling price, profit, gross margin, and markup without confusing two percentages that are often treated as interchangeable. Enter a unit cost and selling price to see profit per unit, margin as a percentage of selling price, and markup as a percentage of cost. You can also enter a target margin to solve the selling price required at the same cost. The calculation is currency-neutral: use dollars, rupees, euros, or another currency as long as both money inputs use the same unit.
How To Use It
- Enter the cost associated with one unit, item, job, or other consistent pricing unit.
- Enter the selling price in the same currency and per-unit basis.
- Review profit, gross margin, and markup. A selling price below cost produces a loss and negative percentages.
- Enter a target margin below 100% to calculate the selling price required from the entered cost.
- Decide which real costs belong in your cost basis before using the result for planning; this calculator does not infer overhead, tax, fees, discounts, or accounting treatment.
Examples
Cost 60, selling price 100
Profit is 40. Gross margin is 40 ÷ 100 = 40%, while markup is 40 ÷ 60 ≈ 66.67%. The percentages differ because they use different denominators.
Price for a 40% margin
With a cost of 60 and target margin of 40%, selling price is 60 ÷ (1 − 0.40) = 100.
Selling below cost
If cost is 120 and selling price is 100, profit is −20, margin is −20%, and markup is about −16.67%. Negative values indicate a loss under the entered cost basis.
Decimal prices
A cost of 12.50 and selling price of 19.99 gives profit of 7.49 and a margin of about 37.47% before considering any omitted costs.
Useful Notes
Profit margin formula
Profit equals selling price minus cost. Gross margin percentage equals profit ÷ selling price × 100. Margin answers what share of sales price remains after the entered cost.
Markup formula
Markup percentage equals profit ÷ cost × 100. Markup answers how much was added relative to cost. For cost 60 and price 100, markup is about 66.67% even though margin is 40%.
Target-margin selling price
Rearranging the margin formula gives selling price = cost ÷ (1 − target margin as a decimal). A 100% target margin has no finite selling price when cost is positive, so the calculator requires a target below 100%.
Choose the cost basis carefully
The arithmetic only knows the cost you enter. Depending on the purpose, a useful cost basis might include purchase or production cost, packaging, payment fees, shipping subsidies, labor, marketplace fees, or allocated overhead. Accounting definitions and tax treatment can differ, so do not assume this simple unit calculation equals an official financial-statement metric.
Currency and rounding
No exchange rate is needed when cost and selling price use the same currency. Keep enough precision during planning, then apply the rounding and price conventions appropriate to your business or transaction.
FAQ
What is the difference between margin and markup?
Margin divides profit by selling price. Markup divides profit by cost. They can describe the same transaction but normally produce different percentages.
How do I calculate selling price from target margin?
Divide cost by 1 minus the target margin expressed as a decimal. For example, cost 60 at a 40% target margin gives 60 ÷ 0.60 = 100.
Can profit margin be negative?
Yes. If selling price is below the entered cost, profit is negative and the calculated margin is negative.
Why is markup undefined when cost is zero?
Markup divides profit by cost, so a positive selling price with zero cost would require division by zero. Margin can still be calculated because its denominator is selling price.
Does this include taxes, fees, shipping, or overhead?
Only if you intentionally include them in the cost or price inputs. The calculator does not automatically add or classify business expenses and should not be treated as accounting, tax, or financial advice.
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