Profit Margin Calculator
Enter cost and price to see your margin and markup — or set a target margin and get the price you should charge.
From cost & price
Price for a target margin
Margin vs. markup — the mistake that quietly kills profits
They sound interchangeable but measure different things. Margin is profit as a share of the price: (price − cost) ÷ price. Markup is profit as a share of the cost: (price − cost) ÷ cost. A product costing $40 sold for $100 has a 60% margin but a 150% markup. A shop owner who wants "50% margins" but applies a "50% markup" is actually earning a 33% margin — a third less profit than intended.
| Markup applied | Actual margin |
|---|---|
| 25% | 20% |
| 50% | 33% |
| 100% | 50% |
| 150% | 60% |
Pricing from a target margin
To hit a chosen margin, divide cost by (1 − margin): a $40 cost at a 60% target gives $40 ÷ 0.4 = $100. Never multiply cost by (1 + margin) — that's markup math and undershoots your goal.
What's a healthy margin?
It varies enormously: grocery retail survives on 1–3% net margins with huge volume; restaurants typically see 3–9% net; software and services often run 60–90% gross. Compare against your own industry, and remember gross margin must cover all your fixed costs before anything is profit — our break-even calculator picks up where this one ends.