Profit Margin Calculator — Margin, Markup, Price & Cost
Enter any two of cost, price, profit, margin or markup and get the rest. See what a discount does to your margin.
Type into any two boxes. The other three are calculated (shown with a dashed border). The two you changed last are the ones the calculator keeps.
Gross profit = $100.00 − $60.00 = $40.00 Margin = $40.00 ÷ $100.00 × 100 = 40% (profit as a share of the price) Markup = $40.00 ÷ $60.00 × 100 = 66.67% (profit as a share of the cost)
If I give a discount, what happens to my margin?
Margin ↔ markup equivalents
| Margin | Markup needed | Price for $1 cost |
|---|---|---|
| 5% | 5.26% | $1.05 |
| 10% | 11.11% | $1.11 |
| 15% | 17.65% | $1.18 |
| 20% | 25% | $1.25 |
| 25% | 33.33% | $1.33 |
| 30% | 42.86% | $1.43 |
| 33.33% | 50% | $1.50 |
| 40% | 66.67% | $1.67 |
| 50% | 100% | $2.00 |
| 60% | 150% | $2.50 |
| 70% | 233.33% | $3.33 |
| 75% | 300% | $4.00 |
| 80% | 400% | $5.00 |
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This profit margin calculator works out gross margin, markup, selling price, cost and gross profit from any two of them. Type a cost and a price to see the margin; type a cost and the margin you want to get the selling price; type a price and a markup to get back to the cost. The two boxes you changed last are the inputs, and the other three are calculated in place, with the formula printed underneath.
The most expensive confusion in small-business pricing is treating margin and markup as the same number. A 50% markup on a $60 cost gives a $90 price and a 33.3% margin, not 50%. The page shows both figures for every calculation, includes a table of margin-to-markup equivalents, and has a discount panel that answers the follow-up question: if I give 20% off, what does my margin become, and how many more units do I have to sell to make the same profit? It deals in gross margin only; overheads are a break-even question.
How to use
- Type into any two of the five boxes: cost, selling price, gross profit, margin % or markup %.
- Read the other three, marked “calculated”, and the formula line that shows how they were worked out.
- To price for a target margin, enter the cost and the margin you want; the selling price appears.
- In the discount panel, enter a % off to see the new margin and the extra sales volume needed to earn the same gross profit.
Frequently asked questions
What is the difference between margin and markup?
Both are profit expressed as a percentage, but of different numbers. Margin is profit divided by the selling price; markup is profit divided by the cost. An item that costs $60 and sells for $100 has a $40 profit, a 40% margin (40 ÷ 100) and a 66.7% markup (40 ÷ 60). Margin can never reach 100%; markup can be any size.
How do I calculate the selling price from cost and margin?
Divide the cost by (1 − margin). For a $60 cost and a 40% margin: 60 ÷ 0.60 = $100. Multiplying the cost by 1.40 instead gives $84, which is a 40% markup and only a 28.6% margin, the classic underpricing mistake.
How do I convert markup to margin?
Margin = markup ÷ (1 + markup). A 50% markup is 0.5 ÷ 1.5 = 33.3% margin; 100% markup (doubling the cost) is a 50% margin. To go the other way, markup = margin ÷ (1 − margin), so a 25% margin needs a 33.3% markup.
What is a good profit margin?
It depends entirely on the industry and on what the margin has to pay for. Grocery and fuel retail run on thin gross margins and high volume, while software, consulting and many services run much higher gross margins because their costs sit in salaries and overheads rather than in the item sold. Compare yourself to businesses with the same cost structure, and check that your gross profit covers your fixed costs with the break-even calculator.
How much does a discount reduce my margin?
More than the discount suggests, because the whole discount comes out of profit. A $100 item costing $60 has a 40% margin. At 20% off it sells for $80, profit falls from $40 to $20, and the margin drops to 25%. You would need to sell twice as many units to make the same gross profit. The discount panel calculates this for your own numbers.
Margin vs markup at a glance
• Gross profit = selling price − cost.
• Gross margin = gross profit ÷ selling price × 100. It tells you how much of each sales dollar you keep after the cost of the item.
• Markup = gross profit ÷ cost × 100. It tells you how much you added on top of what you paid.
• Price from a margin: cost ÷ (1 − margin). Price from a markup: cost × (1 + markup).
Retailers and wholesalers often quote markup because they start from cost; accountants and investors quote margin because it comes from the income statement. When someone says “we work on 30%”, ask which one.
Why discounts cost more than they look
A discount is taken from the price, but the cost does not move, so the full amount of the discount comes out of profit. The lower your margin to start with, the harder a discount hits. At a 30% margin, a 10% discount cuts profit per unit by a third; at a 15% margin, a 10% discount cuts it by two thirds and you need three times the volume to stand still.
That does not make discounts wrong. Clearing old stock, winning a first order or filling idle capacity can all be worth it. The point is to decide with the real numbers in front of you rather than the headline percentage.
Gross margin is not net profit
This calculator deals in gross margin: the price minus the direct cost of the thing sold (materials, wholesale cost, direct labour). Rent, salaries, software, marketing and interest all come out of gross profit afterwards. A product with a healthy 40% gross margin can still lose money if the business does not sell enough of it to cover those fixed costs. The break-even calculator does that part.
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