Profit Margin Calculator
Enter cost and selling price to instantly see your profit margin, markup percentage, and profit per unit. Compare multiple products or reverse-calculate the price you need to charge.
Profit Margin Calculator
Enter cost and selling price to instantly see your profit margin, markup percentage, and profit per unit. Compare multiple products or reverse-calculate the price you need to charge.
Industry Benchmarks
Typical profit margins by industry. Use these as a reference to evaluate your own margins.
Margin vs. Markup: What You Need to Know
What’s the difference between margin and markup?
Profit margin and markup both measure profitability, but they use different reference points. Margin is based on selling price (revenue), while markup is based on cost. The same transaction gives you different percentages depending on which one you use. This distinction matters for pricing strategy, financial reporting, and profitability analysis.
You buy a product for $60 and sell it for $100. Profit is $40. Margin = $40 / $100 = 40%. Margin tells you what percentage of revenue is profit.
Same product: cost $60, sell $100. Profit is $40. Markup = $40 / $60 = 66.7%. Markup tells you how much you added on top of cost.
When to use each
Use margin when analyzing financial performance, comparing businesses, or reporting to investors — it’s the standard in financial statements. Use markup when setting prices from a cost base, especially in retail and wholesale where you apply a fixed percentage on top of the purchase price.
A 50% markup is NOT a 50% margin
This is the most common pricing mistake. If your cost is $100 and you apply a 50% markup, your selling price is $150. But your margin is only 33.3% ($50 / $150). To achieve a 50% margin on a $100 cost, you’d need to charge $200 — a 100% markup. Always double-check which metric you’re using when setting prices.
Frequently Asked Questions
Track real profit margins across all your products
Stop calculating margins in spreadsheets. Frihet shows you real-time profit margins, markup, and profitability across every product, invoice, and client.
Try Frihet freeFrequently Asked Questions
What is profit margin?
Profit margin is the percentage of revenue that remains as profit after covering costs. It’s calculated as (Selling Price - Cost) / Selling Price × 100. A 40% margin means 40 cents of every dollar earned is profit.
What’s the difference between gross margin and net margin?
Gross margin only considers the direct cost of goods sold (COGS). Net margin accounts for all expenses including overhead, salaries, taxes, and interest. This calculator computes gross margin based on the cost and price you enter.
What is a good profit margin?
It depends on your industry. Software companies typically see 70–85% margins, while retail averages 25–50%. A ‘good’ margin is one that covers all your operating costs and leaves room for growth. Compare your margin to industry benchmarks above.
How do I increase my profit margin?
You can increase margins by raising prices, reducing costs, or both. Common strategies include negotiating better supplier rates, eliminating waste, increasing perceived value to justify higher prices, or focusing on higher-margin products in your mix.
Can profit margin be negative?
Yes. A negative margin means you’re selling below cost — losing money on every unit. This sometimes happens intentionally (loss leaders, market penetration) but is unsustainable long-term. The calculator will show negative values if your cost exceeds your selling price.
Is this calculator free?
Yes, completely free with no signup required. For ongoing margin tracking across all your products, invoices, and expenses, try Frihet — which includes a real-time profit dashboard.