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Enter what an item costs you and what you sell it for, and this calculator shows your profit, profit margin and markup. You can also work backwards: choose the margin or markup you want, and it gives you the selling price that delivers it.
How profit margin is calculated
Profit margin tells you how much of each sale you keep after paying for the thing you sold. The calculator uses these standard formulas:
- Profit = selling price − cost
- Profit margin (%) = profit ÷ selling price × 100
- Markup (%) = profit ÷ cost × 100
- Selling price from a target margin = cost ÷ (1 − margin ÷ 100)
- Selling price from a target markup = cost × (1 + markup ÷ 100)
"Cost" should be everything you pay to get one unit ready to sell: the purchase or production cost, packaging, and shipping to you. The result is your gross margin per item. Overheads, advertising, platform fees and taxes are not included unless you add them to the cost.
Margin vs markup
Margin and markup describe the same profit, but they measure it against different numbers. Margin compares profit with the selling price. Markup compares it with your cost. That is why a 50% markup is only a 33.33% margin, and why adding 30% to your cost does not give you a 30% margin (it gives 23.08%).
| Markup | Equals a margin of |
|---|---|
| 10% | 9.09% |
| 20% | 16.67% |
| 25% | 20% |
| 50% | 33.33% |
| 100% | 50% |
To convert, use margin = markup ÷ (1 + markup) and markup = margin ÷ (1 − margin), with the percentages written as decimals.
Worked examples
The examples use dollars, but the maths is the same in any currency.
- Find the margin. An item costs $60 and sells for $100. Profit is $40. Margin is 40 ÷ 100 = 40%. Markup is 40 ÷ 60 = 66.67%.
- Price for a target margin. An item costs $80 and you want a 25% margin. Price = 80 ÷ (1 − 0.25) = 80 ÷ 0.75 = $106.67. Profit is $26.67, which is 25% of the price.
- Price from a markup. An item costs $40 and you add a 50% markup. Price = 40 × 1.5 = $60. Profit is $20, which is a 33.33% margin.
Frequently asked questions
What is a good profit margin?
There is no single answer. It depends on your industry, your costs and how you price. A useful benchmark is businesses similar to yours, and whether your margin still covers your overheads and leaves room to grow.
What is the difference between margin and markup?
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. For the same sale, markup is always the larger number.
Can a profit margin be more than 100%?
No. Margin reaches 100% only if your cost is zero. Markup, however, can be above 100%. Selling something for three times its cost is a 200% markup.
How do I price a product for a 30% margin?
Divide your cost by 0.70. If a product costs $70, the price for a 30% margin is $70 ÷ 0.70 = $100.
Should I enter prices with or without tax?
Enter prices without VAT or sales tax. Tax collected from customers is not your income, so including it makes your margin look better than it is.
Does this include shipping, fees and other costs?
Only if you add them to the cost per unit. For a true picture, include the payment fees and shipping you pay on each sale.