Margin calculator

Calculate profit margin, markup, profit and the selling price required to reach a target margin. See the relationship visually as you change the numbers.

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Gross margin
25.0%
$25.00 profit on $100.00 revenue
Profit
$25.00
Revenue − cost
Markup
33.3%
Profit ÷ cost

Revenue composition

See exactly how much of each sale is cost and gross profit.
Live
Profit share of revenue25.0%

Margin ↔ markup curve

The same profit produces different percentages because the denominator changes.
Live
Current point25.0% → 33.3%

Profit sensitivity to selling price

Cost stays fixed while revenue changes around your current price.
Live
Fixed cost$75.00

Target margin → required price

As the target approaches 100%, the required selling price rises rapidly.
Live
Current target25.0% → $100.00
Live margin intelligence

Read the calculation, not just the percentage.

MetricCurrent valueWhat it means
Margin25.0%Profit as a share of revenue
Markup33.3%Profit as a share of cost
Cost share75.0%Portion of revenue consumed by cost
Profit / sale$25.00Gross profit in the current scenario
25.0% margin ≠ 33.3% markup. Margin uses revenue as the denominator; markup uses cost.

Price for a target margin

$
%
$100.00

Cost allowed at a target margin

$
%
$75.00

Profit margin inputs

$
Your cost of goods, materials or service delivery.
$
Revenue received from the sale.
Use the main calculator for the current margin. The target tools answer the pricing questions that follow from it.
Concept

What is profit margin?

Profit margin tells you what percentage of the selling price remains as profit after the relevant cost is deducted. It is one of the simplest ways to connect a sale price with the money left after cost.

C
Cost

The cost of the goods, materials or service delivery.

R
Revenue

The amount received from the sale, also called selling price.

P
Profit

Revenue minus cost: P = R − C.

M
Margin

Profit divided by revenue: M = P/R.

$75
Cost · 75%
+
$25
Profit · 25%
=
$100
Revenue · 100%

For a $75 cost and $100 selling price: profit = $25, margin = 25%, markup = 33.33%.

The key idea: margin always looks at profit relative to revenue. Markup looks at the same profit relative to cost. That single denominator change explains why the percentages are different.
Formulas

Margin, profit, markup and target-price formulas

Once the relationship between cost, revenue and profit is clear, the main formulas can be rearranged to solve for any missing quantity.

Profit = Revenue − Cost
Margin = Profit ÷ Revenue × 100
Markup = Profit ÷ Cost × 100
Selling price = Cost ÷ (1 − Margin)
C
cost
R
revenue / selling price
P
gross profit
m
margin as a decimal, e.g. 25% = 0.25
QuantityFormulaWhat it answers
ProfitP = R − CHow many currency units remain after cost?
MarginM = P / RWhat percentage of the selling price is profit?
MarkupU = P / CHow large is profit compared with cost?
Target priceR = C / (1 − M)What price produces a chosen margin?

Why target price is not simply cost plus the target percentage

Suppose the cost is $75 and the target margin is 25%. The mistake is to add 25% to cost and call the result a 25% margin. That gives $93.75, but the profit would be $18.75 and the margin would be only 20%.

75%
Cost share of price
+
25%
Profit share
=
100%
Revenue

Price = Cost ÷ 0.75 = $100

Examples

Worked margin examples

Use the examples as mental models: identify the denominator before you calculate the percentage.

Example 1 · Cost $75, selling price $100

Profit = $100 − $75 = $25.

Margin = $25 ÷ $100 × 100 = 25%.

Markup = $25 ÷ $75 × 100 ≈ 33.33%.

Example 2 · Pricing for a 40% margin

Cost = $60 and target margin = 40% = 0.40.

Price = $60 ÷ (1 − 0.40) = $100.

Profit = $40, so $40 ÷ $100 = 40% margin.

Example 3 · 50% markup is not 50% margin

Cost = $100 and markup = 50%, so profit = $50 and revenue = $150.

Margin = $50 ÷ $150 = 33.33%.

CostSelling priceProfitMarginMarkup
$50$100$5050%100%
$75$100$2525%33.33%
$100$150$5033.33%50%
$120$150$3020%25%
Compare

Margin vs. markup: the denominator changes

Margin and markup are related, but they answer different questions. The relationship can be converted mathematically in either direction.

MetricDenominatorFormulaInterpretation
MarginRevenueProfit / RevenueProfit share of the selling price.
MarkupCostProfit / CostProfit added relative to the cost base.
ProfitNoneRevenue − CostCurrency amount left after cost.
m
Margin → markup

markup = m ÷ (1 − m)

u
Markup → margin

margin = u ÷ (1 + u)

1−m
Cost share

cost as a share of revenue

MarginEquivalent markupCost share
10%11.11%90%
20%25%80%
25%33.33%75%
40%66.67%60%
50%100%50%
75%300%25%
Pricing

How target margin changes the required selling price

The target-margin curve becomes steep as the target approaches 100%, because the cost must occupy a smaller and smaller share of the final price.

CostTarget marginRequired priceProfitMarkup
$10020%$125$2525%
$10025%$133.33$33.3333.33%
$10040%$166.67$66.6766.67%
$10050%$200$100100%
$10075%$400$300300%
Pricing caution: a gross-margin target does not by itself account for rent, payroll, advertising, payment fees, taxes, returns, discounts or other operating costs. Gross margin and net margin answer different accounting questions.
Applications

Where margin analysis is useful

Margin calculations appear in retail, wholesale, manufacturing, services and e-commerce because the same cost–revenue–profit relationship can be applied at unit or aggregate level.

SituationQuestionUseful calculation
RetailWhat price gives the desired gross margin?Price = Cost / (1 − Margin)
WholesaleHow does a channel discount affect margin?Margin = Profit / Revenue
ServicesHow much of billed revenue remains after delivery cost?Profit = Revenue − Cost
E-commerceWhat happens when fulfillment or transaction costs rise?Recalculate C and M

For a simple gross-margin model, the cost should include the costs that your chosen definition of gross profit is intended to capture. If you need operating or net profitability, additional expense categories must be included rather than hidden inside a gross-margin figure.

FAQ

Margin calculator questions

What is profit margin?
Profit margin is profit divided by revenue, expressed as a percentage. In a gross-margin calculation, profit is revenue minus the relevant cost.
What is the difference between margin and markup?
Margin divides profit by revenue; markup divides profit by cost. For $25 profit on $75 cost and $100 revenue, margin is 25% and markup is 33.33%.
How do I calculate a target selling price?
Convert the target margin to a decimal and use Price = Cost ÷ (1 − Margin). A $75 cost at a 25% target margin requires a $100 price.
Can margin be negative?
Yes. If revenue is below cost, profit is negative and margin is negative. That represents a loss under the model.
Can margin reach 100%?
A mathematical target can approach 100%, but the target-price formula becomes extremely large because 1 − margin approaches zero. A 100% target would require dividing by zero, so it is not a finite price in this model.
Is gross margin the same as net profit margin?
No. Gross margin is based on gross profit and its defined cost base. Net margin incorporates additional expenses such as operating costs and other items.
Why does a 50% markup equal only a 33.33% margin?
A 50% markup on $100 cost creates $50 profit and $150 revenue. The margin is therefore $50 ÷ $150 = 33.33%.