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Profit Margin Calculator

Work out margin, markup and the price you need to charge.

Calculators Free, no sign-up Runs in your browser
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Selling price
0.00
Profit per unit
0%
Margin
0%
Markup

Breakdown

Margin is profit as a share of the selling price. Markup is profit as a share of the cost. They are always different numbers, and confusing them is the most common pricing mistake there is.

About the Profit Margin Calculator

Profit Margin Calculator answers the three questions that come up around pricing. Given a cost and a price, what is the margin. Given a cost and a target margin, what price do I need. And given a cost and a markup, what does that make the price and the margin.

Margin and markup are different numbers for the same transaction, and confusing them is the single most expensive mistake in small business pricing. Margin is profit as a share of the selling price. Markup is profit as a share of the cost. A fifty percent markup is a thirty-three percent margin, not a fifty percent one, and a business that prices for a fifty percent markup while budgeting for a fifty percent margin will be short every month.

The breakdown shows cost, profit, price, margin and markup together for exactly that reason, so the relationship between the two is visible rather than something you have to remember.

How to use the Profit Margin Calculator

  1. Enter your costWhat the item costs you, including anything you want counted.
  2. Choose what you knowA selling price, a target margin, or a markup.
  3. Read the full breakdownCost, profit, price, margin and markup are all shown.
  4. Copy the figuresThe whole summary can be copied.

Features

  • Margin from cost and price
  • Required price from cost and target margin
  • Price and margin from cost and markup
  • Shows margin and markup side by side
  • Profit per unit and total profit for a quantity
  • Handles a loss, where price is below cost
  • Works in any currency, since only the numbers matter

Who uses this tool

The profit margin calculator is used by writers, developers, students, marketers and anyone else who needs the job done once without installing software. Common cases include:

  • Pricing a product to hit a target margin
  • Checking whether a quoted price is profitable
  • Converting a supplier's markup into your margin
  • Comparing the margin on two products
  • Working out total profit across a quantity

Frequently asked questions

What is the difference between margin and markup?

Margin is profit divided by the selling price. Markup is profit divided by the cost. Something costing 100 and selling for 150 has a 50 percent markup and a 33.3 percent margin. They are always different numbers, and markup is always the larger of the two.

How do I price for a target margin?

Divide the cost by one minus the margin as a decimal. For a 40 percent margin on a cost of 60, that is 60 divided by 0.6, which is 100. Subtracting the percentage instead is the common error and gives too low a price.

Can margin be more than 100 percent?

No. Margin is a share of the selling price, so it approaches 100 percent as cost approaches zero but can never reach it. Markup has no upper limit, which is another reason the two get confused.

Is this gross or net margin?

Gross. It covers the direct cost of the item against its price. Net margin accounts for overheads, salaries, marketing and tax, all of which come out of the gross profit this calculates.

Should tax be included?

Work in figures that exclude sales tax, since tax collected is not yours. Use the VAT calculator to strip it out first if your prices include it.

Is this financial advice?

No. It applies standard formulas to the numbers you enter. What margin your business needs depends on your overheads and your market.

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