Profit Margin Calculator
Calculate gross margin, markup, and profit from cost and selling price.
Quick Tools
| Margin | Markup | Multiplier |
|---|---|---|
| 10% | 11.1% | 1.11x |
| 20% | 25.0% | 1.25x |
| 25% | 33.3% | 1.33x |
| 30% | 42.9% | 1.43x |
| 33.3% | 50.0% | 1.50x |
| 40% | 66.7% | 1.67x |
| 50% | 100% | 2.00x |
| 60% | 150% | 2.50x |
| 75% | 300% | 4.00x |
Understanding Profit Margins
Profit margin is one of the most important metrics in business. It tells you what percentage of your revenue is actually profit after covering costs. Understanding the difference between margin and markup is essential for pricing, budgeting, and financial analysis.
Margin vs Markup — The Key Difference
Margin is profit as a percentage of the selling price (revenue): Margin = Profit / Revenue. Markup is profit as a percentage of the cost: Markup = Profit / Cost. They describe the same profit but from different perspectives.
Example: You buy a product for $60 and sell it for $100. Profit = $40. Margin = 40% ($40/$100). Markup = 66.7% ($40/$60). Same profit, different percentages.
The Margin Formula
Gross Margin = ((Revenue - Cost) / Revenue) × 100
Markup = ((Revenue - Cost) / Cost) × 100
Industry Benchmarks
Average gross margins by industry: Software/SaaS: 70-90%. Financial services: 40-60%. Professional services: 15-25%. Manufacturing: 5-10%. Retail: 2-5%. Restaurants: 3-9%. Grocery: 1-3%. These vary significantly by business model, scale, and competitive landscape.
Pricing Strategy
To achieve a target margin, use: Selling Price = Cost / (1 - Margin%). For example, to achieve a 40% margin on a $60 cost: $60 / (1 - 0.40) = $60 / 0.60 = $100. To achieve a target markup: Selling Price = Cost × (1 + Markup%). For a 50% markup: $60 × 1.50 = $90.