Profit Margin Calculator
Enter what something cost and what it sells for, and this gives the profit, the margin and the markup side by side, each with the division it came from. The page opens on a cost of 40 and a price of 100: a profit of 60, a 60% margin and a 150% markup. They are the same profit over two different divisors, and quoting one where the other was meant is how a price ends up too low to survive.
What is the margin on something that cost 40 and sells for 100?A profit of 60 on a selling price of 100: a 60% margin and a 150% markup.
Change and difference are not the same thing. Going from 80 to 100 is a 25% increase, measured against where you started. But the percentage difference between 80 and 100 is 22.22%, because that one divides by the average of the two. Change has a direction; difference does not. Reports and spreadsheets mix these up constantly, which is why both are here as separate questions.
Margin and markup are the same profit over two different divisors. Something that costs 40 and sells for 100 earns 60 either way, but the margin divides that by the selling price and is 60%, while the markup divides it by the cost and is 150%. Margin can never pass 100%; markup has no ceiling. The profit margin question above reports both, each beside the number it divided by.
Common questions
- How do you calculate profit margin?
- Subtract the cost from the selling price, divide by the selling price, and multiply by 100. On a cost of 40 and a price of 100 that is (100 − 40) ÷ 100 × 100, a 60% margin. The tool prints that line and the markup line together, so the number you copy is never the one you did not mean.
- What is the difference between margin and markup?
- The divisor. Margin divides the profit by the selling price; markup divides it by the cost. The same 60 profit on a 40 cost and a 100 price is a 60% margin and a 150% markup. Margin can never pass 100%, because the profit cannot be more than the whole price. Markup has no ceiling at all.
- What markup gives a 50% margin?
- 100%. A cost of 50 sold at 100 is a profit of 50, which is half the price and all of the cost. The pattern continues: a 20% margin needs a 25% markup, a 30% margin needs about a 42.86% markup, and a 60% margin needs the 150% markup this page opens on. Put your cost and your intended price in the boxes and both figures appear at once.
- What happens if I sell below cost?
- The margin comes back negative and the tool names it a loss rather than printing a bare minus sign. A cost of 120 sold at 100 is a loss of 20, which the tool reports as a margin of -20%. Nothing is hidden and nothing is rounded to zero.
- Is this gross margin or net margin?
- Gross, on the two numbers you enter. It compares one item's selling price with the cost you gave it, and it knows nothing about overheads, tax, shipping or fees. Include those in the cost box if you want them counted, and the arithmetic on screen shows exactly which figures produced the answer.
Exact, computed in double precision and cleaned to twelve significant digits, with the working shown.