Profit Margin Calculator

Get your gross profit, margin and markup from cost and selling price in seconds.

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Results

Profit margin
25%
Gross profit
$250.00
Markup
33.33%

Profit margin tells you what share of revenue you keep as profit, and it is the most fundamental measure of pricing health. A 25% margin means you keep $25 of every $100 in sales.

Margin and markup are often confused. Margin is based on the selling price, markup on cost. This calculator shows both side by side so you never price with the wrong one.

How to calculate Profit margin

  1. Enter your unit cost (ideally excluding VAT).
  2. Enter the selling price or total revenue.
  3. Margin, gross profit and markup are calculated automatically.

Profit margin formula

  • Gross profit = Revenue − Cost
  • Margin (%) = Gross profit ÷ Revenue × 100
  • Markup (%) = Gross profit ÷ Cost × 100

Profit margin example

Buying an item for $750 and selling it for $1,000 gives $250 gross profit, a 25% margin and a 33.33% markup.

Profit margin: common questions

What is the difference between margin and markup?

Margin divides profit by the selling price; markup divides profit by cost. For the same sale, markup is always higher than margin.

What is a good profit margin?

It depends on the industry. Grocery and retail often run 5–15% gross margins, while software and consulting can exceed 60%. Compare yourself with your own sector.

Should I include VAT when calculating margin?

No. For VAT-registered businesses both cost and revenue should exclude VAT, otherwise the margin is distorted.