Profit Margin Calculator
Analyze your profit margin from cost and revenue, or find the selling price needed to hit a target margin. Understand the difference between margin and markup.
Margin vs markup — what's the difference?
Profit margin is profit expressed as a percentage of revenue: Margin % = (Revenue − Cost) ÷ Revenue × 100. Markup is profit expressed as a percentage of cost: Markup % = (Revenue − Cost) ÷ Cost × 100. These are different — a 30% margin is not the same as a 30% markup.
To price a product for a target margin, use Price = Cost ÷ (1 − Margin % ÷ 100). For example, to achieve a 30% margin on a $500 cost, the selling price should be $500 ÷ 0.70 = $714.29, giving a $214.29 profit.
Healthy margin benchmarks
- Retail — 20% to 50% gross margin
- Software / SaaS — 70% to 90% gross margin
- Restaurants — 60% to 70% food cost (30-40% margin)
- Consulting / services — 50% to 70% margin
- Manufacturing — 25% to 40% gross margin
What Does a Profit Margin Calculator Do?
A profit margin calculator compares your revenue to your costs and shows the profit as a percentage of sales. Useful for pricing decisions, checking quotations, and basic business planning.
Profit margin isn't the same as markup — keeping the two separate helps avoid pricing mistakes.
What Goes Into a Profit Margin Calculation
- Revenue or selling price: What the sale actually brought in.
- Cost: Whatever cost you're measuring against.
- Profit: Revenue minus cost.
- Margin percentage: Profit as a percentage of revenue.
- Markup vs margin: Markup is based on cost, margin is based on selling price — don't mix them up.
- Scope: Make sure your cost figure includes what you actually want to measure.
How to Use It
- Open the Profit Margin Calculator.
- Enter the selling price or revenue.
- Enter the matching cost.
- Check the profit and margin percentage.
- Use the number as one input in your pricing decisions.
The result's only as good as the cost figures you put in, so make sure they actually match what you're trying to work out.
Frequently Asked Questions (FAQs)
1. What is profit margin?
Profit as a percentage of revenue or selling price.
2. Is margin the same as markup?
No — margin uses selling price as the base, markup uses cost.
3. Can the calculator replace full business accounting?
No, it's a focused calculation tool, not a complete accounting system.
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