Profit Margin Calculator: Margin, Markup and Price

Use this profit margin calculator to find your gross profit, profit margin and markup, and the selling price required to reach your target margin.

Gross profit–
Profit margin–
Markup–
Price for target margin–

Use prices before sales tax. Include shipping, payment fees and packaging in your cost for an accurate margin.

Profit margin formulas

Gross profit = Price − Cost Profit margin = Profit ÷ Price × 100 Markup = Profit ÷ Cost × 100 Price for target margin = Cost ÷ (1 − Target margin)

Profit margin example

An item that costs $80 and sells for $100:

  • Gross profit: $20
  • Profit margin: 20%
  • Markup: 25%

To reach a 30% margin, the price must be $80 ÷ 0.70 ≈ $114.29. A common mistake is adding 30% to cost ($104), which produces only about a 23% margin.

Pricing tips for small businesses

  1. Use fully loaded cost: shipping, marketplace and card fees, packaging and returns.
  2. Watch platform fees: fees charged on the sale price come straight out of margin.
  3. Plan discounts: a 20% promotion on a 30% margin product wipes out two-thirds of the profit — check it with the discount calculator.
  4. Separate sales tax or VAT: use the VAT calculator.

For other ratios, try the percentage calculator.

Frequently Asked Questions

What is the difference between margin and markup?

Margin is profit divided by selling price; markup is profit divided by cost. Buying at $80 and selling at $100 gives a 20% margin but a 25% markup.

How do I price for a target margin?

Price = Cost ÷ (1 − target margin). To earn a 30% margin on an $80 cost, charge about $114.29.

What is a good profit margin?

It varies widely by industry. Grocery retail often runs on single-digit net margins, while software can exceed 70% gross margins. Compare against your industry benchmarks.

This content is for general information only and is not investment advice. Consider your own situation and consult a licensed professional before making financial decisions.