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Profit Margin Calculator

See profit, gross margin, and markup instantly to make smarter pricing decisions.
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Net profit
$0.00
Profit Margin
$0.00
Markup
$0.00
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Profit Margin Calculator

How to calculate profit margin

Step 1
Enter item cost (COGS)
Step 2
Enter selling price (revenue)
Step 3
Click Calculate; you’ll see Profit, Margin and Markup
Note: We show both margin (profit/revenue) and markup (profit/cost) because both are used in pricing decisions.

Profit margin formula example

Net Profit

Revenue − Cost

Profit Margin (gross margin)

(Revenue − Cost) / Revenue × 100

Markup (profit % vs cost)

(Revenue − Cost) / Cost × 100

Inputs

Cost = $60, Revenue = $100
Net Profit = 100 − 60 = $40
Profit Margin = 40 / 100 = 0.40 × 100 = 40.00%
Markup = 40 / 60 = 0.66 × 100 = 66.67%
The example shows why markup (%) > margin (%) for the same numbers.

Margin vs Markup

What’s the difference and why both matter

Margin (Gross Profit Margin)

Margin shows what portion of the selling price is profit after you cover the cost. It’s expressed as a percentage of revenue and answers the question: “Of every $1 of sales, how much is profit?”
Formula: Margin = (Revenue − Cost) ÷ Revenue × 100

Markup (Profit Percentage)

Markup shows how much you add to cost to set the selling price. It’s expressed as a percentage of cost and answers: “How much profit do I add on top of each $1 of cost?”
Formula: Markup = (Revenue − Cost) ÷ Cost × 100

What is a healthy profit margin?

Short answer: there’s no single good margin, it depends on your industry, business model and growth stage. High-cost businesses like foodservice and groceries typically operate on thinner margins than digital products or niche premium brands. Always benchmark against competitors in your sector.

How to judge your margin

•
Compare to industry benchmarks from industry reports or competitor filings
•
Consider business model: subscription or software businesses often have higher margins than retail.
•
Check sustainability: a healthy margin should cover operating expenses and leave room for reinvestment and profit goals. If you’re unsure, run scenario tests in this calculator to see how small changes affect your true margin.

Profit margin calculator FAQs

What is profit margin?

Profit margin is the percentage of each sale that remains as profit after you subtract the product’s cost. It’s a standard way to compare how profitable products or businesses are.

How do you calculate profit margin?

Subtract Cost from Revenue to get Profit, then divide Profit by Revenue and multiply by 100.
Margin (%) = (Revenue − Cost) ÷ Revenue × 100.

What’s the difference between gross profit, net profit and margin?

Gross profit is calculated as revenue minus the cost of goods sold (COGS). Net profit goes a step further by also subtracting operating expenses, such as marketing, shipping, or overhead, which are not always included in simple profit calculators. Profit margin then expresses profit as a percentage of revenue and can be calculated using either gross or net profit, depending on which costs are included. This calculator reports profit and margin based on the cost inputs you provide, helping you understand your true profitability.

How do I calculate a 20% profit margin (reverse calculation)?

To achieve a 20% margin, divide your total cost by (1 − 0.20). Example: required selling price = Cost ÷ 0.8. Shopify’s guide shows this reverse-calculation approach for target margins.

Which is more important: profit or profit margin?

Both matter. Profit is the actual dollars you keep; margin shows efficiency and comparability. Use profit to manage cash flow and margin to evaluate pricing and competitiveness.

Why do different calculators give slightly different results?

Calculators vary by what they include as cost (COGS only vs. COGS + expenses) and whether they report gross or net margin.

Is this calculator free to use?

Yes, this calculator is designed to be a no-cost resource for quick pricing checks.