Profit Margin Calculator
Start from whichever two numbers you know — cost + price, cost + target margin, or price + target margin — and get cost, price, profit, margin, and markup in one grid. Add shipping and fees for the net margin, and check the margin↔markup conversion table.
Margin ↔ markup quick reference
| Margin | Markup |
|---|---|
| 10% | 11.1% |
| 15% | 17.6% |
| 20% | 25% |
| 25% | 33.3% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100% |
To price from a target margin, divide by (1 − margin): price = cost ÷ (1 − m). Multiplying cost × (1 + m) gives you a markup of m, not a margin — the #1 spreadsheet pricing mistake. Cost $40 × 1.5 = $60 is a 50% markup but only a 33.3% margin.
Margin vs markup — the spreadsheet trap
A team prices a product at cost × 1.5 ("50% markup")
and reports it as 50% margin. The actual margin: 1 − (cost
/ price) = 33%. They're 17 percentage points off — and on
a high-volume product, that's the difference between profitable
and not.
Both numbers are valid. Just call them by their right names. The conversion table in the tool maps one to the other — 20% margin is 25% markup, 50% margin is 100% markup — and highlights the row nearest your current margin.
Common margin benchmarks
- Restaurants — 60–70% gross, 5–15% net
- Retail (clothing, apparel) — 40–60% gross, 5–10% net
- Grocery — 25–35% gross, 1–3% net
- SaaS — 70–85% gross, 10–25% net (huge variance)
- E-commerce (DTC physical goods) — 30–50% gross, 5–10% net
- Consulting / agency services — 40–60% gross, 10–20% net
These are gross margin (price minus COGS only). Net margin accounts for overhead and is typically half of gross.
Related
- Marketing tools hub
- ROAS calculator — break-even ROAS at this margin
- Payment fee calculator — Stripe / PayPal fees
FAQ
What's the difference between margin and markup?
They both describe profit relative to something else, but the denominator is different. Margin = profit ÷ price. Markup = profit ÷ cost. A 50% margin = 100% markup. A 33% margin = 50% markup. Mixing them up is one of the most common pricing errors.
Which one should I use?
Margin for analysis (it tells you what fraction of revenue is profit — directly comparable across products and businesses). Markup for pricing decisions (it tells you what to multiply cost by). Most retail uses markup internally and reports margin externally.
Why is my margin negative?
Your price is below your cost. Selling each unit at a loss. Either raise the price, reduce the cost, or stop selling it.
Does this account for fixed costs?
No — this is gross margin (just unit cost vs unit price). To get net margin, subtract overhead, salaries, rent, marketing, etc. from total profit and divide by total revenue. Net margin is typically much lower than gross margin (often half or less).
Which solve mode should I use?
Cost + price when you know both and want the margin and markup. Cost + margin % when you're pricing: it computes price = cost ÷ (1 − margin) — the correct formula, not cost × (1 + margin). Price + margin % when the market sets the price and you need the maximum cost you can afford: cost = price × (1 − margin). All three modes show the full picture — cost, price, profit, margin, and markup.
What are 'other unit costs' and the net margin?
Per-unit costs beyond the product itself: shipping, payment processing fees, packaging, marketplace commission. They quietly eat margin — a 60% gross margin on a $100 item drops to 52% once $8 of shipping and fees are counted. Enter them and the calculator shows net margin = (price − cost − extras) ÷ price alongside the gross figure.
Why does pricing with cost × (1 + margin) go wrong?
Because that formula applies the percentage to cost, which is the definition of markup, not margin. Margin's denominator is price. To hit a 40% margin on a $60 cost: price = 60 ÷ (1 − 0.40) = $100. The spreadsheet version — 60 × 1.40 = $84 — only delivers a 28.6% margin. The gap grows with the target: at a 50% 'margin' the multiply-version is 17 points short.