Profit Margin Calculator: Margin vs. Markup, Pricing Tool
Are you pricing for profit? Enter your cost and selling price to see your profit margin and markup — or flip to pricing mode and find the exact price that hits your target margin. Everything runs in your browser; nothing is uploaded. Educational use only — not business or financial advice.
How to use this calculator
- Mode A — Cost + Price → Margin: enter what one unit costs you and what you sell it for. You'll get profit per unit, margin, and markup.
- Mode B — Cost + Target margin → Price: enter your cost and the margin you want. The calculator returns the exact selling price you need.
- Cost means whatever cost definition you care about — unit production cost for gross margin, or fully-loaded cost per unit for something closer to net margin. Be consistent when comparing products.
- Results update instantly as you type.
The formulas
Worked example: cost $60, price $100 → profit $40, margin = $40 ÷ $100 = 40%, markup = $40 ÷ $60 = 66.67%. Reverse: cost $60 with a 40% target margin → price = $60 ÷ (1 − 0.40) = $100.
Why the distinction matters: if your supplier raises your cost by 10%, adding a 10% markup to the old price keeps your markup the same but shrinks your margin. Pricing from a target margin protects your profitability.
Rough industry benchmarks
Benchmarks are context, not targets — compare yourself to businesses like yours:
| Industry | Typical net margin | Notes |
|---|---|---|
| Grocery stores | ~1–3% | Huge volume, tiny per-unit profit |
| Restaurants | ~3–9% | Labor and rent eat most of the gross |
| E-commerce / retail | ~5–15% | Varies widely by category |
| Professional services | ~15–30% | Low cost of goods, high labor cost |
| Software (SaaS) | 70%+ gross | Near-zero marginal cost per user |
Related reading: Profit Margin vs. Markup: What's the Difference? and What Is a Good Profit Margin? Benchmarks by Industry
Frequently asked questions
What is the difference between margin and markup?
Margin is profit as a share of the selling price: (Price − Cost) ÷ Price. Markup is profit as a share of cost: (Price − Cost) ÷ Cost. A 50% markup is only a 33.3% margin — they are never the same number.
How do you calculate profit margin?
Profit margin = (Selling price − Cost) ÷ Selling price × 100%. For example, a $100 item that costs $60 has a $40 profit and a 40% margin.
How do you price a product for a target margin?
Price = Cost ÷ (1 − Target margin). To earn a 40% margin on a $60 cost, charge $60 ÷ (1 − 0.40) = $100.
What is a good profit margin?
It varies widely by industry. As rough benchmarks: grocery stores run about 1–3% net margin, restaurants about 3–9% net, and SaaS companies often exceed 70% gross margin. Compare yourself to businesses like yours, not to averages across industries.
What is the difference between gross margin and net margin?
Gross margin uses only the direct cost of goods sold: (Revenue − COGS) ÷ Revenue. Net margin subtracts everything — rent, wages, taxes, interest: Net income ÷ Revenue. This calculator works with whichever cost definition you enter.