Calculate your exact profit margin and markup percentage instantly.
Enter your cost and selling price
Profit margin shows what percentage of your selling price is actual profit after you subtract the cost of the item. It's the single most important number for pricing decisions — a high revenue number means nothing if your margin is too thin to cover overhead, fees, and your own time.
This calculator works out gross margin: selling price minus the direct cost of the item. If you also want to account for marketplace and payment fees, subtract them from the selling price first (see the fee example below), or run the sale through one of our platform calculators such as Etsy, eBay, or PayPal.
To set a price for a target margin: Price = Cost ÷ (1 − Target Margin), with the margin written as a decimal (40% = 0.40).
You buy a product for $50 and sell it for $80.
Now suppose you want a 40% margin on the same $50 item. Price = $50 ÷ (1 − 0.40) = $50 ÷ 0.60 = $83.33. Check it: $33.33 profit ÷ $83.33 = 40%.
If you sell that $80 item online and platform plus payment fees total $8.00, your real profit is $80 − $50 − $8 = $22, and your margin drops from 37.5% to 27.5%. That ten-point gap is why online sellers should always calculate margin after fees, not before.
These two are easily confused. Margin divides profit by the selling price; markup divides it by the cost. The same dollars of profit always produce a larger markup percentage than margin percentage. Mixing them up is a common and expensive mistake: a seller who "adds 30%" to cost thinking that gives a 30% margin actually ends up with only a 23.1% margin.
| Margin | Equivalent markup | Price for a $100 cost |
|---|---|---|
| 20% | 25% | $125.00 |
| 25% | 33.3% | $133.33 |
| 33.3% | 50% | $150.00 |
| 40% | 66.7% | $166.67 |
| 50% | 100% | $200.00 |
| 60% | 150% | $250.00 |
To convert between them: Markup = Margin ÷ (1 − Margin), and Margin = Markup ÷ (1 + Markup), both as decimals.
Gross margin (what this calculator shows) only subtracts the direct cost of the goods. Operating margin also subtracts running costs such as software, rent, advertising, and wages. Net margin subtracts everything, including interest and taxes. A product can have a healthy gross margin and still lose money if overhead is high, so use gross margin for pricing individual items and net margin to judge the business as a whole. Our COGS calculator helps you get the cost figure right for a full period.
It varies heavily by industry. Physical retail and resale commonly run gross margins in the 20–50% range, while software and digital products can exceed 80% because each extra sale costs very little to deliver. The right benchmark is your own category and cost structure, not a universal number. A practical test: your gross profit per sale should comfortably cover your share of fixed costs — the break-even calculator shows exactly how many sales that takes.