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Profit Margin Calculator

Three modes: calculate margin from revenue and cost, find the selling price for a target margin, or compute price from cost plus a markup percentage. Works for products, services, and projects.

What do you want to calculate?

Selling price
$0.00
Profit (price − cost)
$0.00
Gross margin (% of price)
—
Markup (% of cost)
—

Margin = profit ÷ selling price. Markup = profit ÷ cost. Same dollar of profit, two different denominators — a 50% markup is a ~33% margin.

How this is calculated

Margin and markup are the two ways to describe the same dollar of profit. Margin divides profit by selling price; markup divides profit by cost. They are always different percentages.

  1. 1.Profit

    revenue − cost

    Negative when cost exceeds revenue (a loss).

  2. 2.Margin %

    ( profit ÷ revenue ) × 100

    Not calculable when revenue = 0 — the calculator shows an em-dash in that case.

  3. 3.Markup %

    ( profit ÷ cost ) × 100

    Not calculable when cost = 0 — em-dash.

  4. 4.Target margin → price

    cost ÷ ( 1 − target margin / 100 )

    Target margin must be less than 100% — at 100% the formula divides by zero, meaning infinite price.

  5. 5.Cost + markup → price

    cost × ( 1 + markup / 100 )

A 50% markup is a 33% margin. A 100% markup is a 50% margin. Same profit, different denominator.

Margin vs markup — the difference that confuses every founder

If you take one thing from this calculator: margin and markup describe the same dollar of profit from different angles. Margin uses the selling price as the denominator; markup uses the cost. They are always different numbers, and conflating them is the #1 reason small businesses underprice.

Example: you buy a product for $40 and sell it for $100. Profit is $60. The margin is 60% ($60 ÷ $100). The markup is 150% ($60 ÷ $40). Same product, same profit, two different percentages. If a supplier quotes you “a 50% margin” on their wholesale price, you need to charge 2× the wholesale price. If they quote “a 50% markup,” you only charge 1.5×. The difference is real money.

Three pricing scenarios this calculator handles

  1. You know revenue and cost — what's my margin? Use this after a sale to understand profitability. Useful for reviewing past quarters or for analyzing job profitability after the fact.
  2. You know your cost and want a target margin — what should I charge? Use this when pricing a new product or service. Set the margin you need to be sustainable, and let the calculator tell you the minimum selling price.
  3. You know your cost and the markup you apply — what selling price? Use this if your industry talks in markup (retail, restaurants, construction often do). Enter cost and your markup percentage; get the selling price and the equivalent margin.

What good margins look like (by industry)

Benchmarks vary widely. Some realistic gross margin ranges for small businesses in 2026:

These are gross margins (revenue minus direct cost). Net margin — what you actually keep after overhead, salaries, rent, taxes, and reinvestment — is typically 30-50% of gross margin.

Why margin alone is not enough

A 60% gross margin sounds great until you realize that on $10,000 of monthly revenue, it's $6,000 of gross profit — which still has to cover rent, software subscriptions, your salary, and taxes. Margin is a ratio; gross profit dollars is the cash that pays the bills. Track both.

For ongoing month-by-month visibility, use the Profit & Loss Statement Templates. They include formula-enabled Excel sheets for monthly and annual P&Ls — revenue, COGS, gross profit, operating expenses, net income — all calculated automatically as you fill in line items.

Track margins month over month

Profit & Loss Statement Templates

Professional P&L with Current Period, Prior Period, YTD, and % Change columns — complete with balance sheet and AR tracker

$19.99Get the P&L Templates

Related resources

Profit margin FAQs

What is the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A product that costs $50 and sells for $100 has a 50% margin ($50 profit ÷ $100 sale) and a 100% markup ($50 profit ÷ $50 cost). Same dollar of profit, two different percentages. Most small businesses talk in markup when they price; bigger businesses report in margin because it ties directly to revenue.
What is a "good" profit margin for a small business?
It depends entirely on the industry. Retail typically runs 5-15% net margin. Service businesses can run 20-50%. SaaS and digital products can exceed 80% gross margin. The right question isn't "is this margin good" but "does this margin cover my fixed costs, leave me a wage, and allow me to invest in growth." Benchmark against your industry, not other industries.
How do I price for a target margin?
Use the "Price needed for target margin" mode. Enter your cost and the margin you want — the calculator tells you what to charge. Example: $50 cost with a 40% target margin = $83.33 selling price. The formula is cost ÷ (1 − margin).
Should I use gross or net margin?
For pricing one product, use gross margin (selling price minus direct cost of that product). For evaluating overall business health, use net margin (which subtracts overhead, salaries, rent, taxes — everything). This calculator computes gross margin. For a full picture of net profit by month or year, use a profit and loss statement template.
My margin looks high but I'm broke. What's wrong?
Almost always: high gross margin disguising low gross profit dollars (too few sales), or unallocated overhead eating the gross profit. A 60% gross margin on $5,000 of monthly revenue is $3,000 of gross profit — which has to cover everything else. Track the full P&L, not just margin.

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