Profit margin
Profit divided by selling price. It answers: “What percentage of each sales dollar is profit?”
Business calculator
Profit Margin Calculator
Calculate profit margin, markup, profit per unit, and total profit from cost and selling price. You can also work backward from a target margin to find a selling price or the maximum allowable cost.
Sales tax, income tax, overhead, returns, discounts, shipping, and other expenses are excluded unless included in your inputs.
Estimated result
Gross profit margin
46.67%
At $75.00 per unit with $40.00 of direct cost, gross profit is $35.00 per unit. That is a 46.67% margin and 87.5% markup.
Gross profit per unit
$35.00
Gross margin
46.67%
Markup on cost
87.5%
Revenue multiplier
1.88×
Transaction fees
$0.00
Profit after fees
$35.00
Margin after fees
46.67%
Break-even price
$40.00
Margin, markup, and selling price
Markup
Profit divided by cost. It answers: “How much was added above cost?” Markup is not the same percentage as margin.
Selling price
The amount charged to the customer before sales tax. It must cover cost, fees, and the desired profit.
Totals for 100 units
Total revenue
$7,500.00
Total direct cost
$4,000.00
Total fees
$0.00
Profit after fees
$3,500.00
Test a discount
Maximum estimated discount before a loss: 46.67%
Discounted price
$63.75
Profit after fees
$23.75
Gross margin
37.25%
Margin after fees
37.25%
Calculate current margin
Enter cost and selling price to measure profit per unit, margin on revenue, and markup on cost.
Set a target price
Enter cost and a desired margin to estimate the selling price required after optional transaction fees.
Control purchasing costs
Enter price and target margin to find the maximum estimated unit cost that supports the goal.
How to use the profit margin calculator
Choose the calculation that matches the unknown value. Use Calculate margin when cost and price are known. Use Find selling price when cost and target margin are known. Use Find allowable cost when price and target margin are known.
Add fixed or percentage transaction fees when they apply to each sale. Quantity expands the unit estimate into revenue, cost, fees, and profit totals without changing the underlying margin percentage.
Profit margin formula
Profit equals selling price minus unit cost and included fees. Profit margin equals profit divided by selling price, multiplied by 100. Because margin uses revenue as its denominator, it describes how much of each sales dollar remains after the included costs.
Profit margin versus markup
Markup measures profit relative to cost, while margin measures profit relative to selling price. For example, buying an item for $50 and selling it for $100 creates a $50 profit, a 100% markup, and a 50% margin before other fees or expenses.
How to price for a target margin
Pricing from a target margin requires working backward from revenue. With no fees, selling price equals cost divided by one minus the target margin. Percentage-based fees also consume part of revenue, while fixed fees increase the amount that must be recovered.
Gross margin versus net margin
This tool is most useful for unit economics and gross-margin planning. A complete net-margin analysis may also include payroll, rent, software, advertising, returns, depreciation, interest, taxes, and other overhead. Include only costs appropriate to the metric you intend to compare.
How discounts affect margin
A discount reduces selling price while cost may remain unchanged, so profit margin can fall quickly. Use the 10% lower price scenario as a preliminary discount test, then enter the exact discounted price for a final estimate.
Profit margin calculator methodology
The calculator subtracts unit cost, fixed transaction fees, and percentage fees from selling price. It then reports profit as a share of revenue for margin and as a share of unit cost for markup.
Reverse calculations algebraically solve for selling price or allowable cost using the entered target margin and fees. Results are rounded for display, while calculations use unrounded values.
Profit margin calculator FAQs
How do you calculate profit margin?
Subtract total unit cost and applicable fees from selling price to find profit. Divide that profit by selling price and multiply by 100 to calculate profit margin percentage.
What is the difference between margin and markup?
Margin divides profit by selling price. Markup divides profit by cost. The percentages are different even when cost, price, and profit are identical.
How do I calculate a selling price from a target margin?
When there are no fees, divide cost by one minus the target margin expressed as a decimal. This calculator also adjusts for optional fixed and percentage transaction fees.
Can profit margin be negative?
Yes. A negative margin means the selling price is below the combined cost and included fees, producing an estimated loss.
What costs should I include?
Include costs directly associated with providing one unit, such as acquisition, materials, direct labor, packaging, fulfillment, or other costs relevant to your analysis. Keep your method consistent.
Does this calculator include payment processing or marketplace fees?
Optional fixed and percentage fees can be included. Enter the fee structure that applies to each transaction and verify the provider's current terms.
Is gross margin the same as net margin?
No. Gross margin generally considers revenue minus cost of goods sold. Net margin considers a broader set of operating expenses, interest, taxes, and other costs.
What is a good profit margin?
There is no universal target. Appropriate margins vary by industry, business model, volume, overhead, competition, customer acquisition cost, and risk.
Business-planning disclaimer
Results are educational estimates and are not financial, accounting, tax, legal, or pricing advice. Actual profitability depends on complete and accurate costs, returns, discounts, overhead, taxes, market conditions, and other business factors. Verify calculations and consult qualified professionals when appropriate.
Created and maintained by Numeravo Technologies LLC.