Profit Margin Calculator

Profit Margin vs. Markup

Profit margin measures how much of your revenue remains after covering cost. If a product sells for 250 USD and costs 150 USD, the profit is 100 USD and the profit margin is 40%. That means 40 cents of every revenue dollar is profit before any other expenses you choose to include.

Markup measures profit relative to cost instead of revenue. With the same 250 USD sale and 150 USD cost, the markup is 66.67%. Margin and markup are both useful, but they answer different questions: margin tells you how much of the selling price is profit, while markup tells you how much you raised the cost to set the selling price.

Formulas

When revenue and cost are known:

When cost and a target profit margin are known:

In that expression, write margin as a decimal. For example, 40% becomes 0.40.

Worked Examples

Use Revenue & Cost when you already know the selling price or total revenue. For example, if revenue is 250 USD and cost is 150 USD, profit is 100 USD. Profit margin is 100 / 250 x 100% = 40%, and markup is 100 / 150 x 100% = 66.67%.

Use Cost & Target Margin when you want to find the selling price needed for a goal. For example, if cost is 120 USD and the target margin is 40%, the required revenue is 120 / (1 - 0.40) = 200 USD. Profit is 80 USD, and markup is 80 / 120 x 100% = 66.67%.

You can add up to three records to compare different products, pricing scenarios, or client quotes. The tab names carry into the comparison charts, so rename them to something meaningful before comparing.

FAQ

Is a higher markup always the same as a higher margin?

No. Markup and margin move together, but they are not equal because they use different denominators. Margin divides profit by revenue. Markup divides profit by cost.

Can profit margin be negative?

Yes. If cost is greater than revenue, profit is negative and the margin becomes negative. The calculator still shows the result so loss scenarios are visible.

Why is markup unavailable when cost is zero?

Markup divides profit by cost. When cost is zero, that division is undefined, so the calculator shows N/A instead of an unsafe number.

Why is a 100% target margin invalid?

A 100% margin would mean cost is zero compared with revenue, so the formula would require division by zero. For a normal cost-based price target, the target margin must be less than 100%.