Profit Margin Calculator
Know exactly how profitable your products are. Calculate gross margin, markup %, and find the right price for any target margin.
How It Works
Enter selling price and cost to calculate margin and markup. Or enter cost and target margin to find the required price.
Formula
Gross Profit = Revenue − COGS
Margin % = (Profit / Revenue) × 100
Markup % = (Profit / Cost) × 100
Example
Cost $40, price $100: Profit=$60. Margin=60%. Markup=150%.
Target 40% margin on $40 cost: Price = $40/0.60 = $66.67
When to Use This Calculator
Use for pricing decisions, evaluating product profitability, comparing margins across lines, or preparing financial projections.
Common Mistakes to Avoid
- Confusing margin with markup — 50% margin ≠ 50% markup.
- Using price instead of cost in markup formula — markup is always relative to cost.
- Using gross margin alone — high gross margin with high overhead can still produce losses.
Frequently Asked Questions
Good profit margin?
Grocery: 1–3%. Software: 60–80%. Retail: 10–30%. Services: 20–40%.
Gross vs net margin?
Gross margin deducts only COGS. Net margin deducts all expenses including operating costs and taxes.
Price for target margin?
Price = Cost / (1 − Margin%). For 40% margin on $50 cost: $50/0.60 = $83.33.
What is contribution margin?
Revenue − Variable Costs. Shows how much each unit contributes toward fixed costs and profit.
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Last Updated: July 4, 2026