📈 Business & Marketing
Profit Margin Calculator
Calculate gross, operating, and net profit margins. Free online profit margin calculator for US businesses.
What This Calculator Tells You
Profit margin shows how much of each sales dollar you keep as profit after covering the cost of what you sold. A 40% margin means you keep 40 cents of every dollar.
Enter revenue and cost, and the calculator returns the margin, the profit in dollars and the equivalent markup — the same result expressed as a percentage of cost.
What to Enter
- Revenue ($) — the selling price of one item, or total sales for a period.
- Cost / COGS ($) — the direct cost of what you sold: product cost, materials, direct labor, and shipping to you. For gross margin, leave out overheads such as rent and marketing.
Use the same basis for both — per unit with per unit, or monthly totals with monthly totals.
Worked Examples
1. A product sold online
A product sells for $50 and costs $30 to make and ship.
- Enter $50 and $30 → 40% margin, $20 profit, equivalent markup 66.67%.
2. A service project
A freelance project is billed at $2,000; contractor time and software for the project cost $1,400.
- Enter $2,000 and $1,400 → 30% margin, $600 profit, markup 42.86%.
3. Why a 40% markup is not a 40% margin
A shop buys an item for $30 and adds a 40% markup, pricing it at $42.
- Enter $42 and $30 → 28.57% margin.
- Markup is profit as a share of cost; margin is profit as a share of price. Confusing them is one of the most common pricing errors. Work forward from cost with the markup calculator.
How It’s Calculated
- COGS: Cost of Goods Sold
How to Read Your Result
- Gross margin (what this calculator gives when you enter cost of goods) must cover all your other expenses — rent, salaries, marketing — before you make a net profit.
- Negative margin means you sell below cost. Each sale loses money.
- Compare like with like. Margins vary widely by industry: software is often high, groceries and fuel very low. Track your own trend over time.
- Next step: use your margin to find the sales you need with the break-even calculator.
Common Mistakes to Avoid
- Mixing up margin and markup. A 50% markup is a 33.3% margin; a 100% markup is a 50% margin.
- Leaving out landed costs. Inbound shipping, duties and packaging belong in cost of goods.
- Forgetting platform and payment fees. Marketplace commissions and card fees reduce what you keep from each sale.
- Using list price. Base the calculation on what customers actually pay after discounts.
- Confusing gross and net margin. A healthy gross margin can still lead to a net loss once overheads are paid.
When to Use This Calculator
- Price a new product or service profitably.
- Check whether a discount still leaves enough margin.
- Compare which products or clients are most profitable.
- Convert between margin and markup quickly.
Frequently Asked Questions
What is the profit margin formula?
Margin (%) = (revenue − cost) ÷ revenue × 100. With $50 revenue and $30 cost, the margin is $20 ÷ $50 = 40%.
What is the difference between margin and markup?
Margin is profit divided by the selling price; markup is profit divided by cost. The same $20 profit on a $30 cost and $50 price is a 40% margin and a 66.67% markup.
Is this gross margin or net margin?
It is whatever your inputs make it. Enter cost of goods sold for gross margin; enter all expenses for net margin.
How do I price for a target margin?
Price = cost ÷ (1 − target margin). For a 40% margin on a $30 cost: $30 ÷ 0.60 = $50.
Can profit margin be more than 100%?
No. Margin is a share of the selling price, so it can approach 100% but never exceed it. Markup, by contrast, can be any size.
Do you store the values I enter?
No. All calculations happen in your browser. Your data never leaves your device.
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