Profit Margin Calculator
Enter your revenue and cost to instantly see gross profit, margin percentage, and markup.
Margin and markup are not the same thing — confusing them is one of the most common pricing mistakes in business.
30%
Gross margin target for healthy product-based businesses
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Margin and markup are NOT the same — a 50% markup is only a 33% margin
1%
Price increase typically improves profit more than an equivalent cost cut
Pricing and margin — what really matters
The numbers behind every profitable business.
Margin vs markup confusion costs money
Many business owners confuse margin and markup. Setting a 50% markup thinking you have a 50% margin leaves you significantly short. Always know which metric you're using when setting prices.
Pricing is your biggest lever
A 1% price increase on $1M revenue is $10,000 in pure profit — no extra cost. A 1% cost reduction on 70% COGS only saves $7,000. Pricing has more leverage than most businesses realise.
Industry benchmarks matter
A 5% margin in grocery is excellent. A 5% margin in software is catastrophic. Always benchmark your margin against your specific industry, not a generic target. What's healthy varies enormously.
How the Profit Margin Calculator Works
Formula
Gross Profit = Revenue − Cost
Margin % = (Gross Profit ÷ Revenue) × 100
Markup % = (Gross Profit ÷ Cost) × 100Enter your revenue
Total sales revenue — what customers paid.
Enter your cost
Cost of goods sold (COGS) — direct costs to produce or deliver.
Read the output
Gross profit in dollars, margin as % of revenue, markup as % of cost.
This calculator computes gross margin — it only accounts for direct costs (COGS), not operating expenses, taxes, or overheads. For net margin, you'd need to subtract all business costs.
Margin and markup are both based on the same gross profit figure but divide by different denominators. Margin divides by selling price; markup divides by cost. A 50% markup equals a 33.3% margin.
Frequently Asked Questions
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