Profit Margin Calculator
Work out profit margin and markup from your cost and selling price — and see the difference between them.
Last reviewed July 1, 2026
Margin is profit as a % of the selling price; markup is profit as a % of the cost. They are not the same number.
Margin and markup are the two numbers every seller needs — and they're easy to confuse. This calculator takes your cost and selling price and gives you the gross profit, the profit margin (profit as a share of the price), and the markup (profit as a share of the cost).
Knowing both helps you price products correctly, compare suppliers, and avoid the classic mistake of setting a markup and assuming it's your margin.
The Profit Margin formula
Profit = Price − Cost; Margin% = Profit ÷ Price × 100; Markup% = Profit ÷ Cost × 100Price = the selling price · Cost = what the item cost you · Profit = the gross profit. Margin measures profit against the price, markup measures it against the cost.
Worked example
An item costing $40 and selling for $100 makes $60 profit. Margin = 60 ÷ 100 × 100 = 60%, while markup = 60 ÷ 40 × 100 = 150% — same profit, two very different percentages.
Margin vs. markup — the key difference
Margin is profit divided by the selling price; markup is profit divided by the cost. A product that costs $40 and sells for $100 has a $60 profit — that's a 60% margin but a 150% markup. Same profit, two very different percentages.
Retailers usually talk in margin because it directly relates to revenue, while markup is handy when you're setting a price up from cost. Get them mixed up and you can badly under-price.
Frequently asked questions
▶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. Markup is always the larger number for the same profit.
▶How do I calculate profit margin?
Subtract cost from selling price to get profit, divide by the selling price, and multiply by 100. This calculator shows margin and markup together.
▶How do I calculate markup from cost?
Subtract cost from selling price to get profit, divide by the cost, and multiply by 100. An item costing $40 and selling for $100 has a $60 profit and a 150% markup.
▶How do I set a selling price from a target margin?
Divide the cost by (1 minus the target margin as a decimal). For a 40% margin on a $60 cost: 60 ÷ (1 − 0.40) = 60 ÷ 0.6 = $100.
▶Why is markup always higher than margin?
Because markup divides profit by the smaller number (cost) while margin divides by the larger number (price). The same $60 profit is a 60% margin but a 150% markup.
▶What is a good profit margin?
It varies hugely by industry — grocery is thin, software can be high. Compare against typical margins in your sector rather than a universal benchmark.
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Open calculator →Disclaimer: Profit Margin Calculator results are estimates for general information and education only, and are not financial, tax, legal or medical advice. Verify important decisions with a qualified professional.