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- Profit margin is profit as a percentage of revenue. Margin % = (revenue − cost) ÷ revenue × 100.
- A product that costs $40 and sells for $60 has $20 gross profit and a 33.3% gross margin.
- Gross margin subtracts only the cost of goods sold. Net margin also subtracts other expenses such as fees, shipping and overhead.
- Switch the calculator to find the selling price or the maximum cost for a target margin.
How to use the profit margin calculator
Choose what to find
Pick Margin %, Selling price or Cost. The form shows only the two inputs you need.
Enter your numbers
For margin, enter the cost of goods sold and the revenue. For a price or cost, enter the target margin and the other value.
Add other expenses
Open the advanced option to enter fees, shipping or overhead and see net profit and net margin.
Read the result
You get the margin, gross profit, markup on cost and a breakdown from revenue to profit.
Profit margin formula
Margin formulas
Gross profit = revenue − cost of goods sold
Gross margin % = gross profit ÷ revenue × 100
Net profit = gross profit − other expenses
Net margin % = net profit ÷ revenue × 100
Selling price for a target margin = cost ÷ (1 − margin)
Cost for a target margin = revenue × (1 − margin)
Margin is measured against revenue. Markup is measured against cost, so the same sale shows a higher markup than margin.
Profit margin examples
Example 1: gross margin
A product costs $40 and sells for $60.
- Gross profit $60 − $40 = $20
- Gross margin $20 ÷ $60 = 33.3%
- Markup on cost $20 ÷ $40 = 50%
Gross margin is lower than markup because it divides by the larger number, the price.
Example 2: net margin
The same $60 sale carries $6 of fees and shipping.
- Gross profit $20
- Net profit $20 − $6 = $14
- Net margin $14 ÷ $60 = 23.3%
Other expenses cut the margin from 33.3% to 23.3%.
Example 3: price for a target margin
You want a 40% margin on a $40 cost.
- Selling price $40 ÷ (1 − 0.40) = $66.67
- Gross profit $66.67 − $40 = $26.67
Charging $40 × 1.4 = $56 would give only a 28.6% margin.
Example 4: maximum cost
You sell at $100 and need a 30% margin.
- Maximum cost $100 × (1 − 0.30) = $70
- Gross profit $30
Any cost above $70 pushes the margin below 30%.
Example 5: a business year
Revenue is $250,000, cost of goods sold is $150,000 and other expenses are $60,000.
- Gross profit $100,000
- Gross margin $100,000 ÷ $250,000 = 40%
- Net profit $100,000 − $60,000 = $40,000
- Net margin $40,000 ÷ $250,000 = 16%
Gross margin shows pricing power, and net margin shows what the business keeps.
Margin vs markup
Margin and markup describe the same profit against different bases. Margin uses revenue and markup uses cost. A 50% margin equals a 100% markup, and a 40% margin equals a 66.7% markup. To work from cost and a markup percentage, use the markup calculator.
| Cost | Gross profit | Profit margin | Markup on cost |
|---|---|---|---|
| $90 | $10 | 10% | 11.11% |
| $80 | $20 | 20% | 25.00% |
| $70 | $30 | 30% | 42.86% |
| $60 | $40 | 40% | 66.67% |
| $50 | $50 | 50% | 100.00% |
| $25 | $75 | 75% | 300.00% |
Use margin to price and plan
Once you know your margin, test it against real costs. The break-even calculator shows how many units cover your fixed costs, and the wholesale pricing calculator sets prices for shops. Marketplace sellers can see profit after fees with the Etsy profit calculator, the eBay fee calculator and the Amazon FBA profit calculator. Use the discount calculator to see how a sale price changes your margin.
Where a profit margin calculator helps
Check a price
See the margin behind any selling price.
Hit a margin goal
Find the price that delivers your target margin.
Cap your costs
Find the highest cost that still leaves your margin.
Compare products
See which products earn the most on each sale.
Gross margin ignores overhead, taxes and returns. Use the other expenses field to see net margin, and treat the result as a planning figure, not accounting advice.
Profit margin calculator FAQ
How do you calculate profit margin?
Subtract the cost from the revenue, divide by the revenue and multiply by 100. For $60 revenue and $40 cost that is $20 ÷ $60 × 100 = 33.3%.
What is gross profit margin?
It is gross profit as a percentage of revenue, where gross profit is revenue minus the cost of goods sold. It ignores other expenses such as overhead.
What is net profit margin?
It is net profit as a percentage of revenue, after subtracting all expenses from revenue. It shows how much of each dollar of sales the business keeps.
What is the difference between margin and markup?
Margin divides profit by revenue and markup divides profit by cost. A 50% markup is a 33.3% margin, and a 50% margin is a 100% markup.
How do you find the selling price from a margin?
Divide the cost by one minus the margin. A $40 cost with a 40% margin gives $40 ÷ 0.60 = $66.67.
How do you find the cost from a margin?
Multiply the revenue by one minus the margin. At $100 revenue and a 30% margin, the cost is $70.
What is a good profit margin?
It depends on the industry, the business model and the costs involved, so compare against similar businesses rather than a single number.
Can profit margin be negative?
Yes. If the cost is higher than the revenue, the margin is negative and each sale loses money.
Can profit margin be more than 100%?
No. Profit cannot exceed revenue when costs are zero or higher, so margin is at most 100%. Markup can be much higher.
Is a margin calculator the same as a markup calculator?
No. They use different bases. This calculator starts from revenue, and the markup calculator starts from cost.