Profit Margin Calculator
Enter what an item costs and what you sell it for to see your profit, profit margin and markup. Or switch modes to find the price you need to charge to reach a specific margin.
Results
Profit
₹40.00
- Profit margin
- 40%
- Markup
- 66.67%
- Profit as a percentage of cost
A cost of ₹60.00 and selling price of ₹100.00 gives a profit of ₹40.00, a 40% margin.
Where the selling price goes
- Cost₹60 (60.0%)
- Profit₹40 (40.0%)
Show the calculation steps
- Profit = selling price − cost = ₹100.00 − ₹60.00 = ₹40.00.
- Margin = profit ÷ selling price × 100 = ₹40.00 ÷ ₹100.00 × 100 = 40%.
- Markup = profit ÷ cost × 100 = ₹40.00 ÷ ₹60.00 × 100 = 66.67%.
Margin and markup are not the same
Margin is measured against the selling price and can never reach 100%. Markup is measured against the cost and can be any size. An item that costs 60 and sells for 100 earns 40 in profit: that is a 40% margin but a 66.7% markup.
Mixing them up is a common pricing mistake. Adding a 40% markup to a cost of 60 gives a price of 84 and a margin of only 28.6%, not 40%.
Pricing for a target margin
To hit a chosen margin, divide the cost by one minus the margin (as a decimal). For a cost of 60 and a 40% margin, the price is 60 ÷ 0.6 = 100. The calculator also shows the markup that price represents.
What margin includes
The result is only as complete as the cost you enter. For gross margin use the direct cost of the item. For a fuller picture, include shipping, payment fees and a share of overheads in the cost.
Formula
Profit = Selling price − Cost
Margin = Profit ÷ Selling price × 100
Markup = Profit ÷ Cost × 100
Selling price for a target margin = Cost ÷ (1 − Margin ÷ 100)
Where:
- Cost
- = What you pay to buy or produce the item
- Selling price
- = What the customer pays (revenue)
- Margin
- = Profit as a share of the selling price
- Markup
- = Profit as a share of the cost
Example calculation
Cost 60, selling price 100
Inputs
- What do you want to find?
- Profit, margin and markup
- Cost
- ₹60
- Selling Price
- ₹100
Result
- Profit
- ₹40.00
- Profit margin
- 40%
- Markup
- 66.67%
Step-by-step
- Profit = selling price − cost = ₹100.00 − ₹60.00 = ₹40.00.
- Margin = profit ÷ selling price × 100 = ₹40.00 ÷ ₹100.00 × 100 = 40%.
- Markup = profit ÷ cost × 100 = ₹40.00 ÷ ₹60.00 × 100 = 66.67%.
Price for a 40% margin on a cost of 60
Inputs
- What do you want to find?
- Selling price for a target margin
- Cost
- ₹60
- Target Margin
- 40 %
Result
- Selling price
- ₹100.00
- Profit
- ₹40.00
- Profit margin
- 40%
- Markup
- 66.67%
Step-by-step
- Selling price = cost ÷ (1 − margin) = ₹60.00 ÷ (1 − 40% ÷ 100) = ₹100.00.
- Profit = selling price − cost = ₹100.00 − ₹60.00 = ₹40.00.
- Markup = profit ÷ cost × 100 = 66.67%.
Important notes
- Margin and markup are calculated before tax unless you include tax in the cost or price you enter.
- If the selling price is below the cost, profit and margin are shown as negative numbers (a loss).
Disclaimer: This calculator provides estimates for informational purposes and should not be considered financial advice. Actual figures from lenders, banks and investment products can differ because of fees, taxes, rounding rules and changing rates. Consult a qualified professional before making financial decisions.
Frequently asked questions
How do you calculate profit margin?
Profit margin = (selling price − cost) ÷ selling price × 100. Selling for 100 what cost 60 leaves 40 profit, and 40 ÷ 100 × 100 = 40%.
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 cost. The same sale has a lower margin than markup, for example a 40% margin is a 66.7% markup.
How do I find the selling price for a target margin?
Divide the cost by (1 − target margin as a decimal). With a cost of 60 and a target margin of 40%, the price is 60 ÷ (1 − 0.4) = 100. Switch the mode to do this automatically.
Can profit margin be negative?
Yes. If you sell below cost you make a loss, and the margin is negative. The calculator shows this rather than hiding it.
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