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Pricing & profit / Margin Calculator

Margin Calculator

Profit, margin and markup from your cost and selling price, or the price you need to hit a target margin.
$

Enter a number of at least 0

$

Enter a number of at least 0

Profit per item
$8.00
40.0%margin
66.7%markup
$0price $20.00
  • Cost
  • Profit
Selling price$20.00
Cost−$12.00
Profit per item$8.00

Margin is profit ÷ price; markup is profit ÷ cost. Same $8.00, two different percentages.

See breakdown

How the margin calculation works

  1. Profit is price minus cost

    Everything else follows from this one number: what's left of the selling price after paying for the item.

  2. Margin divides profit by the price

    Margin tells you how much of every sales dollar you keep. A 40% margin means 40 cents of each dollar is profit.

  3. Markup divides profit by the cost

    Markup tells you how much you added on top of what you paid. The same sale always shows a higher markup than margin.

  4. To hit a target margin, divide cost by (1 − margin)

    For a 40% margin on a $12 cost: $12 ÷ 0.60 = $20. Adding 40% to the cost gives only a 28.6% margin, which is the most common pricing mistake.

Worked example. An item costs $12 and sells for $20. Profit is $8, margin is $8 ÷ $20 = 40%, and markup is $8 ÷ $12 = 66.7%.

Margin FAQ

How do I calculate margin from cost?

Enter what the item costs you and the selling price; margin is (price − cost) ÷ price. To set a price from cost, divide the cost by (1 − target margin): a $12 cost at a 40% margin needs a $20 price.

How do I calculate profit margin?

Subtract cost from the selling price to get profit, then divide profit by the selling price. $8 profit on a $20 sale is a 40% margin.

What is the difference between margin and markup?

Both use the same profit. Margin divides it by the price, markup divides it by the cost, so markup is always the larger number for a profitable sale.

What price do I need for a 50% margin?

Divide your cost by 0.5. A $12 cost needs a $24 price. Doubling the cost always gives a 50% margin, which is a 100% markup.

What margin does my markup give?

Margin = markup ÷ (1 + markup). A 25% markup is a 20% margin, 50% is 33.3%, and 100% (doubling the cost) is 50%. Going the other way, markup = margin ÷ (1 − margin).

What is a good profit margin for a small business?

It depends on the trade. Retail often runs 25–50% gross margin, restaurants 60–70% on food before labour, and services can be higher. Compare with businesses like yours rather than a single number.

Is gross margin the same as profit margin?

Gross margin only subtracts the cost of the goods. Net profit margin also subtracts rent, wages, fees and every other expense, so it is always lower.

Related calculators

Markup CalculatorAdd a markup to your cost to get a selling price, or enter both to see the markup percentage and the margin it gives you.Margin vs Markup CalculatorTurn a margin into the markup you need, or a markup into the margin you earn, with a sample price and a conversion table.Profit Margin CalculatorGross profit, net profit and both margins for a month, quarter or year, from revenue, cost of goods and operating expenses.Break-Even CalculatorThe units and sales you need to cover your fixed costs, and what it takes to reach a profit target.Contribution Margin CalculatorSee how much each sale contributes to fixed costs and profit, as dollars per unit, a ratio and a total for the period.Price Increase CalculatorGet a new price from a percentage increase, or the price that keeps your margin when a supplier raises your cost.Percent Off & Discount CalculatorThe sale price and your savings from any percent off, including stacked discounts like an extra 10% at checkout.Gross Profit CalculatorWork out gross profit and gross profit margin from your sales, returns, discounts and cost of goods sold, with markup on cost, and COGS from inventory if you don't have it.