Margin CalculatorInstantly calculate profit margin, markup, and revenue from your cost and selling price.
Enter your cost and selling price to instantly see your profit margin, markup percentage, and revenue breakdown. Work backwards from a target margin to find the right price.
Calculation Mode
Your Numbers
What you pay to produce or buy the item
What you charge the customer
Margin
37.5%
Markup
60.0%
Optional — used for revenue & profit projections
Quick Scenarios
Enter your cost and price, then hit Calculate
Your full margin breakdown will appear here
Figures are estimates for planning purposes only — not financial or accounting advice. Margins vary by industry, volume, and overhead. Consult an accountant for business-critical pricing decisions.
A 1% improvement in margin on $100,000 revenue is an extra $1,000 in profit — with zero additional sales.
20–30%
is considered a healthy gross margin for most eCommerce and retail businesses
50%
markup is the same as 33.3% margin — two very different numbers from the same price
5%
restaurant average gross margin — among the thinnest in any industry
Margin vs markup — what is the difference?
Margin and markup both describe the relationship between cost and profit, but they use a different denominator. Confusing the two is one of the most common pricing mistakes in business.
Profit Margin
Margin is calculated as a percentage of the selling price. If you sell something for $100 and your cost was $70, your margin is 30% — because $30 is 30% of $100.
Markup
Markup is calculated as a percentage of the cost. If your cost is $70 and you sell for $100, your markup is 42.9% — because $30 is 42.9% of $70.
| Cost | Price | Margin | Markup |
|---|---|---|---|
| $10 | $12.50 | 20% | 25% |
| $20 | $28.57 | 30% | 42.9% |
| $40 | $60.00 | 33.3% | 50% |
| $50 | $100 | 50% | 100% |
| $25 | $83.33 | 70% | 233% |
Typical profit margins by industry
What counts as a “good” margin depends entirely on your sector. Here are typical gross margin ranges across common business types.
Restaurant
5–15%High overhead, food waste, and labour make restaurant margins notoriously tight.
Retail (physical)
20–40%Brick-and-mortar retail targets 25–40% to cover rent, staff, and shrinkage.
eCommerce
15–50%Varies hugely. Low-volume premium products can reach 50%; commodity goods sit lower.
Software / SaaS
60–85%Near-zero marginal cost of delivering software creates industry-leading margins.
Consulting
50–80%Primarily labour and expertise — overheads are low relative to day rates.
Manufacturing
10–30%Materials, machinery, and labour compress margins unless volume is high.
How the margin calculator works
Choose your mode
Enter cost + selling price for instant margin. Or work backwards from a target margin or markup — the calculator derives the price for you.
Add optional volume
Enter your monthly units sold to unlock revenue projections, profit-by-volume charts, and monthly profit estimates.
Run scenarios
Use the what-if buttons to model price changes instantly. The sensitivity chart shows how your margin responds across ±40% price movement.
How to calculate profit margin
Profit margin is the percentage of revenue that remains as profit after subtracting the cost of producing or purchasing an item. It is one of the most fundamental metrics in business — a high margin means you keep more of each sale; a low margin means you need volume to be profitable.
The formula is straightforward: Margin = (Selling Price − Cost) ÷ Selling Price × 100. If you buy a product for $30 and sell it for $50, your gross profit is $20 and your margin is 40%. That $20 is 40% of the $50 selling price.
Margin is calculated against the selling price — this is what makes it different from markup, which measures profit as a percentage of cost. The distinction matters because quoting a 50% markup to a customer sounds very different from a 33% margin, even though they describe the exact same transaction.
Pricing strategy and margin management
Understanding your margin is only the first step. Managing it strategically is what separates profitable businesses from ones that stay perpetually busy but never build wealth. There are two levers for improving margin: increasing price or reducing cost.
Raising prices is often more effective than it seems. A 5% price increase on a product with a 20% margin actually increases the profit per unit by 25%. But price sensitivity matters — the margin sensitivity chart in the calculator above shows exactly what happens to your margin at various price points, helping you find the sweet spot between volume and profitability.
Reducing cost — through supplier negotiation, volume discounts, or process improvements — has the same arithmetic effect. A $2 reduction in cost on a $20 product improves your margin from, say, 30% to 40%. Over thousands of units, that is significant. This is why businesses obsess over cost of goods sold (COGS) as they scale.
Why a thin margin is dangerous
A margin below 10% leaves almost no buffer for unexpected costs — a supplier price increase, a batch of returns, higher shipping fees, or a marketplace fee change can all push a thin-margin product negative. Many businesses have discovered too late that their bestseller was actually costing them money once all costs were properly accounted for.
This is why “gross margin” calculated on cost alone can be misleading. True profitability requires accounting for fulfilment costs, payment processing fees (typically 1.5–3%), return rates, storage, and marketing. A 20% gross margin can easily compress to 5–8% once these are included, which is why knowing your fully-loaded margin is essential before scaling.
The calculator above gives you the gross margin from cost and price. Use the insight cards to understand the health of your margin and what levers are available to you.
Margin by business model
The right margin target depends entirely on your business model. A physical retailer with rent, staff, and inventory carrying costs needs a higher gross margin — typically 40–60% — just to break even on operating expenses. An eCommerce business with lower overheads can operate profitably on 25–35%.
Software companies are the anomaly. Once the product is built, the marginal cost of delivering it to an additional customer is near zero. This is why SaaS companies report gross margins of 70–85% — there is no cost of goods in the traditional sense, only hosting and support.
For freelancers and service businesses, “cost” is primarily your time. If you charge $500 for a day's work and your effective hourly cost (including tools, admin, and downtime) is $80, your margin is 84%. Service businesses can command very high margins when expertise is scarce — and very low ones when competition is fierce and switching costs are low.
Frequently asked questions
What is profit margin?
Profit margin is the percentage of revenue remaining after subtracting the cost of goods. Calculated as (Price − Cost) ÷ Price × 100. A 30% margin means you keep 30 cents from every dollar of revenue.
What is the difference between margin and markup?
Margin is profit as a percentage of the selling price. Markup is profit as a percentage of the cost. A product costing $40 sold for $60 has a 33.3% margin but a 50% markup. Markup is always higher than margin for the same transaction.
What is a good profit margin for my business?
It depends on your industry. Restaurants: 5–15%. Retail: 20–40%. eCommerce: 15–50%. Consulting and software: 50–80%. As a general rule, margins below 10% offer very little buffer for unexpected costs or price fluctuations.
How do I work backwards from a target margin?
Use the Target Margin mode in the calculator above. Enter your cost and desired margin percentage — the calculator will compute the selling price you need to achieve it. The formula is: Price = Cost ÷ (1 − Margin%).