💰 Profit Margin Calculator

The Profit Margin Calculator converts a cost and a selling price into gross profit, profit margin percentage, and markup percentage. Margin and markup are easy to confuse, and mixing them up is one of the most common (and expensive) pricing mistakes in small business — this tool shows both so you never guess.

How to Use This Tool

Enter the cost of the item and the revenue (selling price). The tool shows the gross profit in currency, the profit margin as a percentage of the selling price, and the markup as a percentage of the cost.

What This Tool Checks

Gross profit = revenue − cost; margin = profit ÷ revenue × 100; markup = profit ÷ cost × 100. Exact arithmetic, no estimates.

Understanding Your Results

Margin tells you what share of each sale is profit (useful for comparing products and planning). Markup tells you how much you added on top of cost (useful for setting a price from a cost). They are always different numbers for the same sale.

How to Fix Common Problems

If the two percentages surprise you, that is expected — a 50% markup is only a 33.3% margin. If profit is negative, your cost exceeds your price. Enter cost and revenue as the same currency and per the same unit (both per item, or both per batch).

SEO Best Practices

Set retail prices from cost using markup, but judge product profitability and compare across a catalogue using margin. Make sure "cost" includes all the costs that vary with the product (materials, shipping in, payment fees), not just the purchase price.

Example

Cost $40, selling price $100: gross profit is $60, margin is 60%, markup is 150%. Cost $40, price $60: profit $20, margin 33.3%, markup 50% — the classic margin-vs-markup gap.

Common Mistakes to Avoid

Applying a target margin as if it were a markup underprices every product. Forgetting variable costs (fees, inbound shipping) inflates the apparent margin.