Finance
Margin Calculator
Work out gross profit margin, markup, and profit per unit from any pair of values — cost, price, margin, or markup. Or flip it around and find the selling price a target margin needs. Results update live, with the working shown.
Enter the numbers
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Scale profit across a batch of units.
Gross margin
40%
Strong margin
0%profit share of price100%
$100.00 − $60.00 = $40.00 profit / unit
Markup
66.67%
Profit / unit
$40.00
Selling price
$100.00
Cost
$60.00
Total profit (×1)
$40.00
Total revenue (×1)
$100.00
Updates as you type
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The basics
What is profit margin?
Profit margin tells you how much of each sale you actually keep. Take the profit — what is left after the cost of the item — and express it as a share of the price you sold it for. It is the single number that says whether a sale is worth making, and it is the language every investor, accountant, and retailer speaks in.
margin = (price − cost) ÷ price
The margin formula
Profit divided by the price, as a percentage. It answers “for every dollar a customer pays me, how much do I keep?” — so it can never exceed 100%.
(100 − 60) ÷ 100 = 40%
profit = price − cost
The profit underneath
Margin is just dressed-up profit. Find the gap between what you charge and what it cost you first; the percentage is that gap measured against the price.
$100 − $60 = $40 per unit
Method
How to calculate margin by hand
Three steps take you from a cost and a price to a margin percentage.
- 1
Find the profit
Subtract the cost from the price. This is the gross profit on one unit — the raw dollars the sale earns you.
$100 − $60 = $40 - 2
Divide by the price
Divide that profit by the selling price, not the cost. Using the price as the base is what makes it a margin rather than a markup.
$40 ÷ $100 = 0.40 - 3
Multiply by 100
Turn the decimal into a percentage. The result is your gross profit margin.
0.40 × 100 = 40%
Worked examples
Margin across different businesses
The same formula runs from a thin-margin grocery item to a fat-margin software product — only the numbers change.
The everyday case: you know what an item cost you and what you sell it for.
Given cost = $60.00 and price = $100.00
Profit: $100.00 − $60.00 = $40.00
Margin: $40.00 ÷ $100.00 × 100 = 40%
Markup: $40.00 ÷ $60.00 × 100 = 66.67%
margin = 40%markup = 66.67%
Notice the markup is always the larger number — 66.67% here — because it measures the same profit against the smaller base (cost, not price).
The big confusion
Margin vs. markup
These two get mixed up constantly, and the mistake is expensive — pricing for a 40% “margin” when you mean markup leaves real money on the table. They measure the same profit against different bases.
margin = profit ÷ price
Margin looks at the price
How much of the selling price is profit. It is the number on a financial statement, capped below 100%, and always the smaller of the pair.
$40 ÷ $100 = 40% margin
markup = profit ÷ cost
Markup looks at the cost
How much you added on top of what the item cost you. It has no ceiling and is what most people mean when they say “I marked it up.” For cost-plus pricing, use the markup calculator.
$40 ÷ $60 = 66.67% markup
markup → margin
Convert markup to margin
Divide the markup by one-hundred-plus-itself. A markup always shrinks when you re-express it as a margin, because the base grew from cost to price.
50% markup = 33.33% margin
margin → markup
Convert margin to markup
Divide the margin by one-hundred-minus-itself. A margin always grows when re-expressed as a markup. The two only meet at zero.
40% margin = 66.67% markup
Quick chart
Margin → markup → price lookup
Every common margin, the markup it equals, and the selling price it implies for your cost. Set your cost once and read the whole table — the answer to “what markup gives a 40% margin?” and “what should I charge for a 50% margin?” in one place.
See the markup and selling price for every common margin.
| Margin | Equivalent markup | Selling price | Profit / unit |
|---|---|---|---|
| 5% | 5.26% | $63.16 | $3.16 |
| 10% | 11.11% | $66.67 | $6.67 |
| 15% | 17.65% | $70.59 | $10.59 |
| 20% | 25% | $75.00 | $15.00 |
| 25% | 33.33% | $80.00 | $20.00 |
| 30% | 42.86% | $85.71 | $25.71 |
| 33.33% | 49.99% | $90.00 | $30.00 |
| 35% | 53.85% | $92.31 | $32.31 |
| 40% | 66.67% | $100.00 | $40.00 |
| 45% | 81.82% | $109.09 | $49.09 |
| 50% | 100% | $120.00 | $60.00 |
| 55% | 122.22% | $133.33 | $73.33 |
| 60% | 150% | $150.00 | $90.00 |
| 66.67% | 200.03% | $180.02 | $120.02 |
| 75% | 300% | $240.00 | $180.00 |
Read it both ways: a 40% margin is a 66.67% markup, and on a $60.00 cost that means a selling price of $100.00.
Where it shows up
Why margin matters
One percentage that drives pricing, comparison, and survival across every kind of business.
set the price
Pricing decisions
Start from the margin you need to stay healthy, then work backward to the price. It stops you from charging too little to cover the real cost of doing business.
compare anything
Comparing products
Raw profit is misleading across different price points. Margin normalizes it, so a cheap item and an expensive one can be judged on the same footing.
spot trouble
Tracking health
A margin sliding downward over time warns you that costs are creeping up or discounting has gone too far — long before the bank balance shows it.
Worth knowing
Rules and pitfalls
A handful of facts that keep margin math honest — and stop the classic mistakes.
margin < markup
Margin is always smaller
For any profitable sale the margin is below the markup, because the price is a bigger base than the cost. If your two numbers come out equal, something is wrong.
margin < 100%
Margin has a ceiling
You cannot keep more than the whole price, so margin can approach but never reach 100%. A quoted “120% margin” is really a markup in disguise.
price = cost ÷ (1 − margin)
Work backward safely
Don’t just add the margin percent to the cost — that gives a markup. To hit a true target margin, divide the cost by one minus the margin.
gross ≠ net
Gross isn’t the whole story
Gross margin ignores rent, wages, and overhead. A fat gross margin can still hide a loss-making business once those are subtracted to get net margin.
negative = loss
Below zero means a loss
A negative margin is a sale made under cost. Occasionally deliberate — a loss-leader — but usually a pricing error to fix fast.
same profit, two views
One profit, two lenses
Margin and markup never disagree about the dollars of profit. They only disagree about which base to compare them to, so always state which one you mean.
Reference
Every margin formula
The full set, so you can solve for whichever value you are missing.
| To find | From | Formula |
|---|---|---|
| Profit | cost & price | price − cost |
| Margin % | cost & price | (price − cost) ÷ price × 100 |
| Markup % | cost & price | (price − cost) ÷ cost × 100 |
| Price | cost & target margin | cost ÷ (1 − margin) |
| Price | cost & target markup | cost × (1 + markup) |
| Cost | price & target margin | price × (1 − margin) |
| Margin | from a markup | markup ÷ (100 + markup) × 100 |
| Markup | from a margin | margin ÷ (100 − margin) × 100 |
FAQ
Common questions
Gross margin is the share of the selling price left over after the cost of the goods sold. It is profit divided by revenue, written as a percentage: a $100 item that cost you $60 keeps $40 of profit, a 40% gross margin. The higher the margin, the more of every sale you actually pocket.
Subtract the cost from the selling price to get the profit, divide that profit by the price, then multiply by 100. Margin % = (price − cost) ÷ price × 100. For a $100 price and a $60 cost, that is (100 − 60) ÷ 100 × 100 = 40%.
Both describe the same dollar of profit, but measured against a different base. Margin is profit ÷ price; markup is profit ÷ cost. For a $100 price and a $60 cost, the $40 profit is a 40% margin but a 66.67% markup. Because the price is bigger than the cost, the margin is always the smaller of the two numbers.
Rearrange the formula: price = cost ÷ (1 − margin). For a 40% margin on a $60 cost, that is 60 ÷ (1 − 0.40) = 60 ÷ 0.60 = $100. Switch the calculator to the “Cost + Margin” mode and it does this for you and shows the working.
No. Margin is a fraction of the selling price, and profit can never exceed the price itself, so margin tops out just below 100% (you would need a zero cost to reach it). Markup, which is measured against cost, has no such ceiling — a 300% markup is perfectly possible.
Yes. When the cost is higher than the price, you sell at a loss, so the profit is negative and the margin drops below zero. A −20% margin means you lose 20 cents on every dollar of sales — a sign to raise the price or cut the cost.
No. Gross margin counts only the direct cost of the goods sold. Net margin goes further and subtracts every other expense too — rent, salaries, marketing, tax — so it is always lower. This calculator works out gross margin; net margin needs your full operating costs.
It depends entirely on the industry. Grocery and retail often run on single-digit margins, restaurants sit around 10–15%, while software and digital products can clear 70% or more. As a rough rule of thumb, under 20% is thin, 20–40% is healthy, and over 40% is strong for most physical-goods businesses.
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Ugo CharlesBuilt and fact-checked against our editorial standards · Last updated June 2026
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