Profit Margin Calculator
Three calculators in one: get the margin and markup from your cost and price, find the price you need for a target margin, or work out the maximum cost for a price you want to hit.
Built and checked by Saurabh Pandey · page updated
Calculator
Fee breakdown
Enter your numbers to see the result.
How to use the Profit Margin Calculator
- Choose what you want to find. Most people start with "Margin & markup".
- Enter the cost of one item. Include everything it takes to make or buy it and get it ready to sell: materials, the wholesale price, inbound shipping.
- Enter the selling price (before VAT/GST if you are registered) or the margin you are aiming for.
- Read the margin and markup side by side. They describe the same profit in two different ways.
How it is calculated
Gross profit = selling price − cost Profit margin = gross profit ÷ selling price × 100 Markup = gross profit ÷ cost × 100 Price for a target margin = cost ÷ (1 − margin ÷ 100) Max cost for a price = price × (1 − margin ÷ 100)
Margin compares profit with the selling price; markup compares it with the cost. An item that costs $25 and sells for $40 has a $15 profit, which is a 37.5% margin but a 60% markup. Mixing them up is one of the most common pricing mistakes: adding a 40% markup does not give you a 40% margin.
| Target margin | Markup needed |
|---|---|
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100% |
| 60% | 150% |
Worked examples
US: a candle that costs $25 and sells for $40
A 60% markup gives a 37.5% margin.
| Selling price | $40.00 |
| Cost | −$25.00 |
| Gross profit | $15.00 |
Margin 37.5% · Markup 60%
UK: the price for a 40% margin on an item costing £18
Dividing by 0.6 gives £30. Adding 40% to the cost would give only £25.20, a 28.6% margin.
| Selling price | £30.00 |
| Cost | −£18.00 |
| Gross profit | £12.00 |
Margin 40% · Markup 66.67%
India: the most you can pay for stock to sell at ₹999 with a 35% margin
Useful when negotiating with a supplier.
| Selling price | ₹999.00 |
| Cost | −₹649.35 |
| Gross profit | ₹349.65 |
Margin 35% · Markup 53.85%
What is a good profit margin for an online shop?
There is no single right number, because it depends on what other costs come out of the gross profit. A gross margin is what is left before marketplace fees, payment fees, shipping, packaging, advertising and your own time. Many handmade and small e-commerce sellers aim for a gross margin of 50% or more so there is still a profit after platform fees and advertising; resellers of branded goods often work with much thinner margins and rely on volume. Use the Etsy, eBay or Shopify calculators to see the net profit after fees.
Frequently asked questions
How do I calculate profit margin?
Subtract the cost from the selling price to get the profit, divide the profit by the selling price, and multiply by 100. For a $40 item that costs $25: (40 − 25) ÷ 40 × 100 = 37.5%.
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. The same $15 profit on a $25 cost and $40 price is a 37.5% margin and a 60% markup.
How do I price a product for a 50% margin?
Divide the cost by 0.5, which is the same as doubling it. For other margins divide the cost by (1 − margin). For a 40% margin divide by 0.6.
Can a profit margin be more than 100%?
No. Margin can never reach 100% unless the item costs nothing. Markup has no upper limit: an item bought for $10 and sold for $50 has a 400% markup but an 80% margin.
Should I include VAT or GST in the selling price?
If you are registered for VAT or GST, use the price without tax, because the tax belongs to the government. If you are not registered, use the full price the customer pays.