Find profit, margin and markup, or the price you need to reach a target margin.
Quick answer
The profit is $50, a profit margin of 33.3% and a markup of 50.0%. Margin is measured against the selling price and markup against the cost, which is why markup is always the larger number.
| Markup on cost | Profit margin on price |
|---|---|
| 10% | 9.1% |
| 25% | 20.0% |
| 50% | 33.3% |
| 75% | 42.9% |
| 100% | 50.0% |
| 150% | 60.0% |
These figures are computed with the same formulas as the Profit Margin Calculator above. Change the inputs in the tool to see your own result.
The Profit Margin Calculator turns revenue and cost into profit, profit margin and markup, and works backwards too: enter your cost and the margin or markup you want, and it gives the selling price. Margin and markup are often confused, so the results show both and explain the difference. A chart shows how much of each sale is cost and how much is profit.
Made for everyone. Typical uses:
Revenue of $10,000 with $6,000 of cost gives $4,000 of profit, a 40% margin and a 66.67% markup. To earn a 40% margin on an item that costs $60, sell it for $100 (60 ÷ 0.60). A 50% markup on the same $60 item gives $90, which is only a 33.33% margin.
The calculator handles one revenue and one cost figure. It does not separate gross, operating and net profit, so decide which costs to include: product cost only gives gross margin, all business costs give net margin.
Accuracy: Formulas follow standard published methods and are checked against worked reference examples. Results are estimates based on the values you enter and do not replace advice from a qualified professional.
Expert Tip
Margin can never reach 100%, but markup can exceed it. If you mark up 100%, you double the cost and have a 50% margin.
Profit is what is left after costs: revenue minus cost. Profit margin expresses it as a share of the selling price: margin = profit ÷ revenue × 100. Markup expresses it as a share of the cost: markup = profit ÷ cost × 100. The same sale has both numbers, and they are never equal unless profit is zero.
With revenue of $10,000 and costs of $6,000, profit is $4,000. The margin is 40 percent (4,000 ÷ 10,000), and the markup is 66.67 percent (4,000 ÷ 6,000). Confusing the two is one of the most common and expensive pricing mistakes in small business.
Imagine a supplier who says "we add 50 percent". You buy an item for $50 and sell it at a 50 percent markup: $75. Your profit is $25, so your margin is 33.3 percent, not 50 percent. If your business plan or your bank assumes a 50 percent margin, every forecast built on it will be too optimistic. To earn a 50 percent margin on a $50 cost you must sell at $100, a markup of 100 percent.
The calculator shows both numbers side by side so you always know which one you are talking about, and it works backwards too. A 30 percent margin on a $50 cost needs a price of 50 ÷ 0.70 = $71.43. A 60 percent markup on the same cost gives $80, which is a 37.5 percent margin.
Most businesses know the margin they need before they know the price. Divide the cost by (1 − the margin as a decimal) to get the price. For a 40 percent margin, divide by 0.60. For a 25 percent margin, divide by 0.75. Compare the price you get with what customers will pay and what competitors charge. If the market will not bear it, the answer is not to accept a lower margin blindly but to reduce cost, change the product or find a different market.
Margins differ enormously between industries, and a number that is excellent in one is dangerous in another. Grocery retail often runs on single-digit net margins, restaurants on low single digits, while software and professional services can see much higher figures because their extra unit cost is low. Compare your margin with similar businesses rather than with a general rule.
Also consider volume. A 10 percent margin on a large number of sales can beat a 40 percent margin on a few. Use the Break-Even Calculator to see how many sales you need at a given price and cost, and the ROI Calculator to see whether an investment in stock or equipment pays back.
Discounts erode margin faster than they seem to. A product with a 40 percent margin sold at 10 percent off has a margin of only 33.3 percent. At 20 percent off the margin falls to 25 percent, and to sell the same profit you must sell far more units. Before running a sale, calculate the margin at the sale price with this tool and the Discount Calculator, then check whether the extra volume is realistic.
For the difference between the two ratios with more examples, read profit margin vs markup. If tax is part of your pricing, the Sales Tax Calculator and the GST VAT Calculator separate the tax from your revenue so you do not count it as income. The tool works with any currency and stores nothing.
Margin and markup are not the same. Learn both formulas, how to convert between them, and how to set prices that really earn the profit you planned.
Learn the ROI formula, how to annualize a return, what to count as cost, and how ROI applies to stocks, property and marketing, with worked examples.
The break-even formula, fixed and variable costs, contribution margin, and how a price change or a cost cut moves the number of sales you need.
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