Profit Margin Calculator
Calculate profit margin, markup, and break-even point. Understand the difference between margin and markup.
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Margin vs Markup
What Is Profit Margin?
Profit margin tells you what percentage of your selling price is actual profit. If your margin is 40%, it means for every $1 you earn, $0.40 is profit and $0.60 covers your costs.
Many people confuse margin with markup. They are related but not the same thing.
- Margin = (Selling Price − Cost) ÷ Selling Price × 100
- Markup = (Selling Price − Cost) ÷ Cost × 100
A product with a 50% margin has a 100% markup. A product with a 33.33% margin has a 50% markup. Understanding this distinction is critical when setting prices for your products or services.
How to Price Your Products
Use this calculator to quickly find a profitable selling price. Enter your cost and desired selling price, and the tool instantly shows your margin and markup. If the margin is too low, increase the selling price. If it is too high, your product may not be competitive.
A good starting point is to research what competitors charge for similar products. Then work backward: if competitors sell at $80 and your cost is $50, your margin will be 37.5% — which is healthy for most industries.
For break-even analysis, enter a known fixed cost as the selling price and see how many units you need to sell to recover that investment. This helps with planning launches, marketing budgets, and inventory decisions.
Frequently Asked Questions
What is the difference between profit margin and markup?
Profit margin is the percentage of the selling price that is profit. Markup is the percentage added to the cost price to arrive at the selling price. For example, if you buy something for $50 and sell it for $80, your margin is 37.5% and your markup is 60%.
How do I calculate profit margin?
Profit margin is calculated using the formula: ((Selling Price - Cost) / Selling Price) × 100. For example, if your cost is $50 and selling price is $80, margin = ((80 - 50) / 80) × 100 = 37.5%.
How do I calculate markup percentage?
Markup percentage is calculated using the formula: ((Selling Price - Cost) / Cost) × 100. For example, if your cost is $50 and selling price is $80, markup = ((80 - 50) / 50) × 100 = 60%.
What is a good profit margin?
A good profit margin depends on the industry. For retail, 5-10% is typical. For services, 10-20% is common. For software, margins can exceed 70%. Always research your specific industry benchmarks.