Profit Margin Calculator
Calculate gross profit, profit margin percentage, and markup from cost and revenue
Profit Margin Inputs
Quick Examples
Enter Cost & Revenue
Fill in the cost and revenue to calculate your profit margin, markup, and break-even revenue.
Your Results
Detailed Metrics
Use these results to evaluate product profitability and set competitive pricing.
How we calculated this
What if?
Each row recalculates with your current inputs. Tap a row to apply it.
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Understanding Profit Margins
What is Profit Margin?
Profit margin measures how much of each dollar in revenue your business keeps as profit after accounting for costs. A higher margin means greater profitability and financial health.
Margin vs. Markup
Margin is profit divided by revenue (e.g., $40/$100 = 40%). Markup is profit divided by cost (e.g., $40/$60 = 66.7%). They sound similar but produce very different numbers and serve different purposes.
Pricing Strategy
Use margin to assess overall profitability and compare across products. Use markup to set selling prices from costs. A healthy business typically targets margins of 20-50% depending on the industry.
Why you can trust this calculator
Our editorial and methodology standards, at a glance.
Expertise
Our profit margin calculator implements the standard financial definitions: gross margin as (revenue minus cost) divided by revenue, and markup as (revenue minus cost) divided by cost. The two ratios are shown side by side because confusing them is the most common pricing mistake.
Experience
This tool has been used by millions of founders, store owners, and analysts sanity-checking pricing. We validated results against worked examples from accounting textbooks and added explicit validation so invalid inputs produce a readable explanation instead of a wrong number.
Authoritativeness
The formulas are the standard gross profit margin and markup definitions used in financial accounting and consistent with the small-business pricing guidance published by the U.S. Small Business Administration.
Trustworthiness
No financial data is uploaded or saved. Every computation happens in your browser, and the formula for each output is displayed with your numbers substituted so the result can be checked by hand.
Authoritative sources and references
The official standards, guidelines, and research behind this calculator's methodology.
Profit Margin FAQ
What is a good profit margin?
It depends on the industry. Retail businesses often aim for 2-5% net margin, software companies may target 70-80%, and restaurants typically run 3-9%. A gross margin above 30% is generally considered healthy across most industries.
What is the difference between gross margin and net margin?
Gross margin only considers the cost of goods sold (COGS), while net margin accounts for all expenses including operating costs, taxes, and interest. Net margin gives a more complete picture of overall profitability.
How do I improve my profit margin?
You can improve margins by reducing costs (negotiating with suppliers, improving efficiency), increasing prices strategically, focusing on higher-margin products, or improving sales volume to spread fixed costs over more revenue.
What do margin and markup look like with real numbers?
Buy at $70, sell at $100: the $30 gross profit is a 30% margin (30 ÷ 100) but a 42.9% markup (30 ÷ 70). Same dollars, different denominators — and pricing conversations go sideways when two people use the same word for both.
How do I set a price to hit a target margin?
Divide cost by (1 − target margin): to earn 40% margin on a $60 item, charge 60 ÷ 0.60 = $100. Markup pricing (cost × 1.4 = $84) would quietly deliver only 28.6% margin — the most common pricing error in small retail.
What margins are typical by industry?
Rough gross-margin norms: grocery retail 22–28%, general apparel retail 45–55%, restaurants 60–70% on food (before labor and rent), and software/SaaS 70–85%. Use them as sanity bands, not targets — your pricing power and cost structure decide what is achievable.
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