Profit Margin Calculator
Calculate profit, profit margin, and markup from cost and selling price.
Understand the result
See why the two percentages differ and how to convert between them. Read Margin vs. Markup: What's the Difference? Browse Money & Finance tools.
What this calculator does
This calculator compares an item cost with its selling price. It shows the dollar profit, the profit margin, and the markup so you can see the same sale from three useful angles.
Inputs and results
Cost is what you paid or spent to provide the item or service. Selling price is what the customer pays. Profit is selling price minus cost.
Profit margin compares profit with selling price. Markup compares profit with cost. These two percentages are not the same, and mixing them up is a common pricing mistake.
How the calculation works
Profit equals selling price minus cost. Margin equals profit divided by selling price. Markup equals profit divided by cost. The calculator formats margin and markup as percentages.
Worked example
If an item costs $60 and sells for $100, the profit is $40. The margin is 40% because $40 is 40% of the $100 selling price. The markup is 66.67% because $40 is 66.67% of the $60 cost.
Tips for interpreting results
A high markup does not always mean a high margin. If your selling price is below cost, profit and margin are negative. If cost is zero, markup cannot be defined because there is no cost base to compare against.
Frequently asked questions
What is the difference between margin and markup?
Margin divides profit by selling price. Markup divides profit by cost.
Can profit be negative?
Yes. A selling price below cost produces a loss and a negative margin.
Which is better for pricing, margin or markup?
Many businesses track margin because it shows what portion of sales revenue remains after cost. Markup is useful when adding a percentage on top of cost.
Does this include overhead or taxes?
Only if you include those amounts in the cost you enter.