Profit Margin Calculator
Find profit margin from cost and price — and see how it differs from markup.
Profit margin is profit as a percentage of the selling price: subtract cost from price, then divide by the price. A product that costs $60 and sells for $100 has a $40 profit and a 40% margin. Margin is not markup; markup measures profit against cost, so the same product carries a 67% markup. Enter cost and price to see both.
These results are estimates for informational purposes only and are not financial, tax, or legal advice. Your actual figures from a lender or the IRS may differ. Consult a qualified professional before making decisions.
Profit margin
40%
- Revenue (selling price)
- $100.00
- Cost
- $60.00
- Profit
- $40.00
- Profit margin (profit ÷ price)
- 40%
- Markup, for comparison (profit ÷ cost)
- 66.67%
About the Margin Calculator
Profit margin measures how much of each sales dollar you keep after covering the cost of the item. Subtract the cost from the selling price to get the profit, then divide that profit by the selling price. A coffee that costs you $2 and sells for $5 earns $3, a 60% margin, meaning sixty cents of every revenue dollar is gross profit. The figure most often confused with margin is markup, and they answer different questions. Margin divides profit by price; markup divides the same profit by cost. The coffee has a 60% margin but a 150% markup, because $3 is 60% of the $5 price and 150% of the $2 cost. Retailers often price using markup and report results using margin, so confusing the two distorts both the price and the reported profitability. This calculator shows profit, margin, and markup together, so you can set a price and read its true profitability at once. Margin can approach but never reach 100%, because profit cannot exceed the price.
Frequently asked questions
What is the difference between margin and markup?+
Both use the same profit, but margin divides it by the selling price while markup divides it by the cost. A 40% margin is roughly a 67% markup on the same item.
How do I calculate profit margin?+
Subtract cost from selling price to get profit, then divide profit by the selling price and multiply by 100. ($100 − $60) ÷ $100 = 40%.
Can profit margin be more than 100%?+
No. Margin is profit divided by price, and profit cannot exceed the price, so margin approaches but never reaches 100%. Markup, which divides by cost, can exceed 100%.
What is a good profit margin?+
It varies widely by industry. Grocery retail runs on thin margins while software can exceed 80%. Compare against typical margins for your sector rather than a single universal target.