CAL-002
Profit Margin Calculator
Margin tells you what share of each sale you actually keep. Enter what the product costs you and what you sell it for to see profit, margin and markup together.
- Free
- No signup
- Private · runs locally
How to calculate profit margin
- Enter your cost - what you paid for the product or what it costs you to make.
- Enter your selling price, excluding tax.
- Read your profit in currency, your margin as a percentage of the selling price, and the equivalent markup.
Margin vs markup
Margin and markup describe the same profit against different bases, and confusing them is one of the most expensive mistakes in retail pricing. Margin = Profit ÷ Selling price. Markup = Profit ÷ Cost.
Buy at $60 and sell at $100 and you have $40 of profit. That is a 40% margin but a 66.67% markup. Someone who applies a 40% markup thinking they are getting a 40% margin sells at $84 and keeps only 28.6% - a shortfall that quietly destroys profitability across a catalog.
Margin can never reach 100%, because profit is always a share of the selling price. Markup has no upper limit.
| Margin | Equivalent markup |
|---|---|
| 20% | 25% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
Frequently asked questions
What is a good profit margin?
It depends entirely on the sector. Grocery retail runs on single-digit margins, general e-commerce often targets 20–40%, and software can exceed 80%. Compare against businesses like yours rather than against a universal benchmark.
Is this gross or net margin?
Gross margin - it considers the direct cost of the product only. Net margin also subtracts overheads such as rent, salaries, advertising and payment fees.
Should I include payment processing fees in the cost?
For a more realistic figure, yes. Use the payment fee calculator to work out what a transaction actually leaves you with, then feed that into your cost.