Margin Calculator
Calculate profit margin, cost and selling price.
Margin = (Sale - Cost) / Sale. Markup = (Sale - Cost) / Cost. Margin is always less than markup for the same product.
Profit margin calculator: optimize your selling prices
Understanding the difference between profit margin and markup is essential for setting prices intelligently in any business. Profit margin is calculated as (Sale-Cost)/Sale. Markup is (Sale-Cost)/Cost. A product costing $50 sold at $100 has a 50% margin but a 100% markup.
Our calculator offers two usage modes: "Calculate margin" (enter cost and selling price) and "Calculate selling price" (enter cost and desired margin).
Healthy margins vary significantly by industry. Retail typically operates with 25-50% margins, restaurants with 60-70% on beverages but only 30-35% on food, SaaS software can achieve 70-90% margins. Knowing your industry standard helps you set competitive prices.
Frequently asked questions
What is the difference between margin and markup?
Margin is calculated on the selling price: (Sale-Cost)/Sale. Markup is calculated on the cost: (Sale-Cost)/Cost. A 50% margin equals a 100% markup. Accountants and finance professionals generally use margin, while merchants and salespeople usually refer to markup. Both measure profitability but from different perspectives.
What is a good profit margin?
It depends entirely on your industry and business model. A gross margin of 50% is excellent for retail, but low for software. As a general reference, a net margin of 10% is considered healthy for most industries, 20% or more is considered very good, and below 5% indicates the business may be vulnerable to market fluctuations.
Why can margin never be 100%?
Mathematically, margin is (Sale-Cost)/Sale. For the margin to be 100%, the cost would have to be $0: (Sale-0)/Sale = 100%. In reality, no product or service has zero cost. Markup, on the other hand, can exceed 100%, which sometimes causes confusion between the two concepts.