Profit Margin Calculator
Enter your product cost and selling price to see gross profit, margin percentage, and markup.
| Gross profit | |
| Profit margin | |
| Markup |
How to calculate profit margin and markup
Gross profit is the selling price minus the cost. Profit margin expresses that profit as a percentage of the selling price: margin = (price − cost) ÷ price × 100. Markup expresses the same profit as a percentage of the cost: markup = (price − cost) ÷ cost × 100.
For example, if an item costs $50 and sells for $80, the gross profit is 80 − 50 = $30. The profit margin is 30 ÷ 80 × 100 = 37.5%, while the markup is 30 ÷ 50 × 100 = 60%.
Because margin divides by the larger number (price), it is always lower than markup for the same sale. Mixing the two up is a common pricing mistake — a 50% markup is only a 33.3% margin.
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price, while markup is profit as a percentage of the cost. On a $50 cost and $80 price, the $30 profit is a 37.5% margin but a 60% markup.
What is a good profit margin?
It varies widely by industry. Many retailers operate on gross margins of 20–50%, restaurants often run thinner, and software businesses can exceed 70%. Compare against benchmarks for your specific sector.
Can profit margin be negative?
Yes. If the selling price is below the cost, the gross profit is negative and so is the margin, meaning you lose money on every unit sold at that price.