Profit Margin Calculator
Calculate gross profit margin from revenue and cost, find the selling price needed to hit a target margin, or convert between markup and margin percentages. Built for ecommerce, retail, and freelancers.
Revenue + cost → gross profit margin
Enter the selling price (revenue) and the cost to find gross profit, gross margin percentage, and markup percentage.
Price for a target margin
Enter your cost and the gross margin % you want to achieve. We’ll calculate the minimum selling price.
Convert markup % to margin %
If you know your markup percentage, enter it here to find the equivalent gross margin.
Markup vs margin: what’s the difference?
This is one of the most commonly confused concepts in business pricing. Both use the same profit figure — they just express it as a percentage of different things.
Markup
Profit ÷ Cost × 100
On a $60 cost, $100 sell: $40 ÷ $60 = 66.7% markup
Gross Margin
Profit ÷ Revenue × 100
On a $60 cost, $100 sell: $40 ÷ $100 = 40% margin
Markup is always higher than margin for the same transaction. A 50% markup equals a 33.3% margin. A 100% markup equals a 50% margin. If a supplier quotes a “50% margin” but means markup, the actual margin is only 33.3% — a costly confusion when building a pricing model. Use the markup calculator to work directly from cost and markup percentage to selling price.
Typical gross margins by industry
| Industry | Typical gross margin | Note |
|---|---|---|
| Ecommerce (physical goods) | 40–60% | Higher with private label; lower in commodities |
| Software / SaaS | 70–85% | Low COGS; high operating costs |
| Retail (apparel) | 50–60% | Fast fashion lower; luxury much higher |
| Restaurants / food service | 60–70% | On food cost alone; net margin is 3–10% |
| Freelancing / services | 80–95% | Minimal COGS; time is the main cost |
| Electronics / consumer tech | 25–40% | Component costs compress margins |
How to price for a target margin
Use the formula: Selling price = Cost ÷ (1 − Margin%). To achieve a 40% margin on a $60 product: $60 ÷ (1 − 0.40) = $60 ÷ 0.60 = $100. Profit = $40, which is 40% of $100. This is the correct way to price — adding 40% to cost ($84) gives a 40% markup but only a 28.6% margin. Use the “Price for a target margin” section in the calculator above to run any scenario instantly.
Margin after discounts and promotions
When you offer a discount, your margin compresses unless your cost falls too. A product with a 50% gross margin selling for $100 (cost $50) drops to a 37.5% margin at 20% off ($80 revenue, still $50 cost). If you regularly run promotions, factor this into your base pricing. The discount + tax calculator shows the net price after discount and tax in one step, useful for checking whether a promoted price still covers costs.
Margin vs salary: same concept, different context
Gross margin measures how much of each sale you keep after direct costs — the business equivalent of a pay rise. If your margin improves from 35% to 42% on the same revenue, that’s a 20% increase in gross profit. The salary raise calculator applies the identical percentage-increase logic to employment income.
Frequently asked questions
Gross profit margin = (Revenue − Cost of Goods Sold) ÷ Revenue × 100. It measures what percentage of each sale is profit after covering the direct cost to produce or source the item. It does not include operating expenses, salaries, rent, or taxes — those reduce it further to net margin.
A gross margin of 40–60% is considered healthy for ecommerce selling physical goods. After shipping, returns, advertising, and platform fees, net margins of 10–20% are sustainable. Below 25% gross margin makes profitability difficult once overheads are included.
Margin = Markup ÷ (1 + Markup), using decimal form. A 50% markup (0.50) ÷ 1.50 = 0.333 = 33.3% margin. A 100% markup ÷ 2 = 50% margin. Use the conversion tool in the calculator above.
Selling price = Cost ÷ (1 − 0.30) = Cost ÷ 0.70. For a $42 cost: $42 ÷ 0.70 = $60 selling price. Profit = $18, which is 30% of $60. Use the “Price for a target margin” section in the calculator above.
Gross margin only subtracts the direct cost of goods from revenue. Net margin subtracts all costs including operating expenses, salaries, rent, interest, and taxes. Net margin is almost always lower. This calculator computes gross margin.
Yes — completely free, no signup, no ads. All calculations run instantly in your browser and nothing is stored or sent anywhere.