Enter your cost and your selling price, and this calculator instantly shows your profit, your profit margin percentage, and your markup percentage. Knowing these numbers is essential for pricing products and services so your business stays profitable — and for spotting when a 'good' price actually loses you money.
Margin vs markup — they're not the same
This trips up a lot of business owners. Markup is your profit as a percentage of cost, while margin is your profit as a percentage of the selling price. A 50% markup is only a 33% margin. Because margin is based on the higher number (the price), it's always the smaller percentage — and it's the one investors and accountants care about.
How to price for a target margin
To hit a specific profit margin, divide your cost by (1 minus the target margin as a decimal). For a 40% margin on a $60 item: $60 ÷ 0.60 = $100 selling price. Pricing to a margin rather than a markup ensures you actually keep the percentage of revenue you intend to.
- Profit = selling price − cost
- Margin = profit ÷ selling price
- Markup = profit ÷ cost
- Price for a target margin: cost ÷ (1 − margin)
Frequently Asked Questions
What is the difference between margin and markup?
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A 50% markup equals a 33% margin because margin is calculated on the higher number.
How do I calculate profit margin?
Subtract the cost from the selling price to get the profit, then divide the profit by the selling price and multiply by 100. For a $100 item costing $70: ($30 ÷ $100) × 100 = 30% margin.
What is a good profit margin?
It varies by industry, but many small businesses aim for a gross margin of 30–50%. Service businesses often run higher; retail and wholesale typically lower. The key is covering all costs and leaving a sustainable profit.