Profit Margin Calculator
Cost and price give profit — but margin divides it by the price and markup by the cost. Both are shown, because pricing with the wrong one quietly undercharges every sale.
Margin and markup are not synonyms, and the difference bills you
Both describe the same profit: margin divides it by the selling price, markup by the cost. Because the price is bigger than the cost, margin is always the smaller number — and a business that sets prices by '50% margin' while computing markup underprices every single item it sells.
Margin = (price − cost) ÷ price · Markup = (price − cost) ÷ cost
Example: cost $14, price $25: profit $11. Margin = 44%; markup = 78.6%. If you wanted a true 44% markup instead, the price would be $20.16. One vocabulary slip, $4.84 a unit — at volume, a salary.
The conversion to memorize
Margin = markup ÷ (1 + markup); markup = margin ÷ (1 − margin). A 25% margin is a 33% markup; a 100% markup is a 50% margin. The pairs in the result let you speak both dialects of your own price.
How this is calculated
Profit = price − cost; margin and markup as defined above, shown to two decimals. This is gross margin on a single unit — it takes no account of fixed costs, which is why a healthy margin can still lose money under the break-even line.
Frequently asked questions
Which do accountants mean by 'margin'?
Gross margin: profit over revenue (price). When a report says a company runs a 12% net margin, the denominator is total revenue after all costs — same construction as this page's margin, deeper cost stack.
What margin should a product have?
By industry folklore: grocery single digits, restaurants' food cost implying 65–70% gross margin on dishes, software 70–90%. The universal rule is only that margin × volume must clear fixed costs — the break-even page's arithmetic.
Is a 100% margin possible?
Only if cost is zero — margin approaches 100% as cost approaches nothing (pure digital goods come close). Markup, by contrast, is unbounded, which is precisely why confusing them misleads.
My supplier quotes '40% off list' — is that margin?
That is a discount structure, not your margin: your margin depends on your cost (60% of list) and your selling price. Run your real pair of numbers here.
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