Profit margin calculator
Calculate gross profit margin from cost and selling price, or find the price that hits a target margin, with the working shown.
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- Free, no account
Selling price
$100.00
solved
Markup
150.00%
solved
Cost
$40.00
Selling price
$100.00
Gross profit per unit
$60.00
Price multiplier
× 2.500
price ÷ cost
Margin
60.00%
profit ÷ price
Markup
150.00%
profit ÷ cost
- Cost of goods40.0%$40.00
- Gross profit60.0%$60.00
How the selling price splits. Margin is the green slice as a share of the whole bar.
Formula and working
Gross profit
profit = price − cost = 100 − 40 = $60.00
Margin (share of the selling price)
margin % = profit ÷ price × 100 = 60 ÷ 100 × 100 = 60.00%
Markup (share of the cost)
markup % = profit ÷ cost × 100 = 60 ÷ 40 × 100 = 150.00%
Price from a target margin
price = cost ÷ (1 − margin) = 40 ÷ (1 − 0.6000) = $100.00
Converting between the two
margin = markup ÷ (1 + markup) · markup = margin ÷ (1 − margin) margin = 1.5000 ÷ (1 + 1.5000) = 0.6000 = 60.00% margin = 150.00% markup
The classic mistake: adding 30% to cost gives a 23.1% margin, not 30%. Retailers quote margin, suppliers quote markup, and the gap is real money.
Nothing pasted yet.
| Markup on cost | Equals margin | Price multiplier |
|---|---|---|
| 5% | 4.8% | × 1.05 |
| 10% | 9.1% | × 1.10 |
| 15% | 13.0% | × 1.15 |
| 20% | 16.7% | × 1.20 |
| 25% | 20.0% | × 1.25 |
| 30% | 23.1% | × 1.30 |
| 40% | 28.6% | × 1.40 |
| 50% | 33.3% | × 1.50 |
| 60% | 37.5% | × 1.60 |
| 75% | 42.9% | × 1.75 |
| 100% | 50.0% | × 2.00 |
| 150% | 60.0% | × 2.50 |
| 200% | 66.7% | × 3.00 |
| 300% | 75.0% | × 4.00 |
| 400% | 80.0% | × 5.00 |
Assumptions
- These are gross figures based on the cost of goods only. Overheads, salaries, rent, marketing, shipping, payment-processing fees, returns and write-offs all come out of the gross profit before anything reaches the bottom line.
- Prices are shown excluding sales tax or VAT. Add tax after pricing — margin should always be calculated on the net price.
- Margin is capped below 100% by definition, because profit is a share of the price. Markup has no ceiling: a 900% markup is a 90% margin.
- Bulk mode reads the last numeric field on each line as the cost and the first non-numeric field as the name, so both "Widget, 4.20" and a bare column of numbers work.
- Everything runs in this tab. Your cost prices are commercially sensitive and there is no server here to send them to.
The margin formula
gross profit = selling price − cost
gross margin % = gross profit ÷ selling price × 100The denominator is the selling price. That is the whole definition, and it is what separates margin from markup: margin asks "what fraction of the money I took did I keep?", markup asks "how much did I add to what I paid?"
Sell for 100 having paid 62 and you kept 38 of every 100 that came through the till — a 38% gross margin. To go the other way and price for a target margin, divide the cost by one minus the margin: 62 ÷ 0.62 = 100.
Gross, operating and net margin
"Profit margin" means three different things depending on how far down the income statement you are. Only the first is a per-product number, and only the first is what this page computes.
| Margin | Revenue minus… | Used for |
|---|---|---|
| Gross | direct cost of goods sold | Pricing a product, comparing lines |
| Operating | COGS plus operating expenses | Judging how efficiently the business runs |
| Net | everything, including interest and tax | What the owners actually keep |
A shop can run a 55% gross margin and a 2% net margin quite comfortably. The gap is rent, wages and everything else that does not vary with the individual sale.
What counts as cost of goods
- In: the item itself, inbound freight, import duty, packaging, per-unit manufacturing labour.
- Usually in for e-commerce: payment-processing fees and marketplace commission, because they scale exactly with each sale.
- Out: rent, salaried staff, software subscriptions, marketing, insurance — these are operating expenses and belong below the gross line.
Be consistent. Whether you put card fees in COGS matters far less than whether you put them in the same place every month, because margin is only useful as a trend.
Typical gross margins by sector
| Sector | Typical gross margin |
|---|---|
| Grocery retail | 20–28% |
| General merchandise retail | 30–45% |
| Restaurant food | 60–70% |
| Restaurant drinks | 70–80% |
| Apparel and accessories | 50–65% |
| Professional services | 50–70% |
| Software (SaaS) | 70–85% |
Broad industry ranges for orientation only, not a benchmark to be measured against. The comparison that matters is your own margin last quarter.
Why a small margin change matters more than a small volume change
Gross profit responds linearly to volume and linearly to margin — but a price rise carries no extra cost, while extra volume does. Raising prices 5% on a 30% margin lifts gross profit by about 17%, because the whole increase is profit. Selling 5% more units lifts it by 5%. That asymmetry is why margin is where operators look first.
The reverse is equally sharp: a 5% discount off a 30% margin gives away a sixth of the profit on every unit sold, and you need roughly 20% more volume to stand still.
Margin, discounts and tax
Two rules keep margin honest. Calculate it on the net price, before VAT, GST or sales tax — that money was never yours. And calculate it on the actual price after discounts, not the list price, because a 20%-off promotion on a 40% margin item leaves a 25% margin, and averaging a promotional month against list prices hides exactly the problem you are looking for.
Runs entirely in your browser
Cost prices and margins are competitive information. This page never sends them anywhere: there is no server, no analytics and no third-party request, and the bulk pricing table and its CSV, Excel and PDF exports are all produced locally. It works offline.
Questions
What is the profit margin formula?
Margin % = (selling price − cost) ÷ selling price × 100. The denominator is the price, which is what separates margin from markup and caps it below 100%.
What is a good profit margin?
It is entirely sector-dependent. Grocery retail runs on single-digit gross margins, hospitality around 60–70% on drinks, and software on 80%+. The useful comparison is against your own sector and your own trend, not a universal number.
Why can a margin never reach 100%?
Because profit is a share of the price and the cost has to fit inside the same price. A 100% margin would mean the goods cost you nothing. Markup has no such ceiling.
Is this gross margin or net margin?
Gross margin — revenue minus the direct cost of the goods. Net margin also subtracts overheads, salaries, marketing, interest and tax, and is calculated on a whole business rather than a single line.