Work out your margin, markup and profit – and the price to charge for the margin you want.
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How to use the profit margin calculator
- Enter your cost and selling price.
- Read margin, markup and profit.
- Set a target margin to get the price to charge.
Margin vs markup
Margin is profit as a share of the selling price; markup is profit as a share of cost. A product that costs 40 and sells for 65 has a 38.5% margin but a 62.5% markup. Mixing them up is the most common pricing mistake.
Formulas
Margin = (price – cost) / price. Markup = (price – cost) / cost. Price for a target margin = cost / (1 – margin).
Frequently asked questions
What is a good profit margin?
It varies widely: grocery runs at a few percent, retail 30-50%, software and services often 60% or more.
Is this gross or net margin?
Gross, if you enter only the direct cost of the item. Include overheads in the cost for a net figure.
Does a 50% markup mean a 50% margin?
No – a 50% markup is a 33.3% margin.