Profit Margin Calculator
Calculate profit margins and markups instantly. Enter cost and selling price to see profit margin %, markup %, and profit amount. Includes reverse calculator to find selling price from desired margin.
Enter cost and selling prices to calculate profit margin
💡 All calculations happen in your browser. No data is sent to any server.
This calculator provides estimates for reference purposes only. Consult with a financial advisor for business decisions.
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How to Use
- 1 Choose Calculator Mode — Click Standard Calculator to calculate margin from cost and selling price, or Reverse Calculator to find the selling price needed to achieve a desired profit margin.
- 2 Enter Cost Price — Type the cost price (what you pay for the product or service). This is your baseline for calculating profit. You can optionally change the currency symbol to match your local currency.
- 3 Enter Selling Price or Desired Margin — In Standard mode, enter your selling price (what you charge customers). In Reverse mode, enter your desired profit margin percentage (e.g., 30 for 30% margin), and the tool will calculate the selling price you need.
- 4 View Results and Health Indicator — See your Profit Margin %, Markup %, and Profit Amount instantly. The profit margin card is color-coded: red for loss, yellow for low margin (<20%), green for healthy margin (20-40%), and blue for excellent margin (>40%).
- 5 Understand Margin vs Markup — Profit Margin is profit as a percentage of selling price. Markup is profit as a percentage of cost price. Example: Cost $50, Sell $100 → Margin is 50%, Markup is 100%. Both are shown in the results. Click the info box to see a detailed explanation.
- 6 Use Example Scenarios — In Standard mode, see "What if" scenarios showing what selling price you'd need to achieve 20%, 30%, or 40% margins with your current cost price. Copy any result with one click using the copy buttons.
Frequently Asked Questions
What's the difference between profit margin and markup?
Profit Margin is profit as a percentage of the selling price: (Selling Price - Cost) / Selling Price × 100. Markup is profit as a percentage of the cost price: (Selling Price - Cost) / Cost × 100.
Example: If you buy for $50 and sell for $100, your profit is $50. Margin = $50/$100 = 50%. Markup = $50/$50 = 100%. Margin is always lower than markup for the same profit amount. Retailers typically think in markup, while businesses often report margins to investors.
What is a healthy profit margin?
Healthy profit margins vary significantly by industry:
- Retail: 2-5% (grocery) to 40-50% (luxury goods)
- Restaurants: 3-5% (tight margins)
- Software/SaaS: 70-90% (high margins)
- Manufacturing: 10-20%
- Services: 15-30%
This tool uses general guidelines: <20% is low (yellow), 20-40% is healthy (green), >40% is excellent (blue). Research your specific industry benchmarks. Remember, higher margins aren't always better—volume and market share matter too.
How do I use the reverse calculator?
The reverse calculator helps you find the right selling price to achieve your target profit margin. Click Reverse Calculator, enter your cost price and desired margin percentage (e.g., 35 for 35% margin), and the tool calculates the selling price you need.
Example: Cost is $60, you want 40% margin → Selling price = $60 / (1 - 0.40) = $100. This is useful for pricing new products, adjusting prices to meet profit goals, or comparing different margin scenarios.
Is this tool accurate for business decisions?
This tool provides accurate mathematical calculations for profit margin and markup. However, this is NOT financial or business advice. Pricing decisions involve many factors beyond margin: market demand, competition, brand positioning, customer value perception, volume discounts, and operating expenses.
This calculator shows gross margin (revenue minus cost of goods), not net margin (which includes all expenses). Always consult a business advisor or accountant for strategic pricing decisions.