Free Profit Margin Calculator
Enter what an item costs you and what you sell it for. You get the profit in money, the profit margin as a percentage of the selling price, and the markup as a percentage of the cost — the two percentages that get mixed up most often.
What the item costs you.
What you sell it for.
Fill in the fields and the result appears here as you type.
How profit margin is calculated
Profit is the selling price minus the cost. The margin is that profit expressed as a percentage of the selling price — profit ÷ price × 100 — so it answers "how much of what the customer paid did I keep?"
Markup is the same profit measured against the cost instead: profit ÷ cost × 100. The two numbers describe the same sale and are almost never equal, which is why this calculator shows both rather than making you pick.
A worked example
You buy an item for 60 and sell it for 100.
- Profit
- 100 − 60 = 40
- Profit margin
- 40 ÷ 100 × 100 = 40%
- Markup
- 40 ÷ 60 × 100 = 66.67%
The same sale is a 40% margin and a 66.67% markup. Quoting the larger number to yourself is how a business ends up believing it is twice as profitable as it is.
Questions about profit margin
What is the difference between margin and markup?
Both measure the same profit, against different bases. Margin divides profit by the selling price; markup divides it by the cost. A 60 cost sold at 100 is a 40% margin and a 66.67% markup. Margin can never exceed 100%; markup has no ceiling.
What is a good profit margin?
It depends entirely on the trade. Grocery retail runs on low single figures and survives on volume; software and professional services can hold far more. The number worth watching is your own over time — a margin falling quarter on quarter matters more than how it compares to an industry average that may not describe your costs.
Does this account for VAT or overheads?
No. It compares one item’s cost against its selling price, which is gross margin. Rent, salaries, tax and anything else not in the item cost sit below this figure. Use the profit calculator for revenue against total costs, and the VAT calculator to add or remove tax.