Markup & Margin Calculator
How to calculate profit margin
Start by finding the gross profit: Profit = Selling price − Cost. Then divide profit by the selling price and multiply by 100: Profit margin (%) = Profit ÷ Selling price × 100. This shows the share of each sale that is profit before any additional expenses not included in cost.
How to calculate selling price from margin
When you know your cost and target margin, use Selling price = Cost ÷ (1 − Margin ÷ 100). For example, at a 20% target margin, divide cost by 0.80. This works because cost must represent the remaining 80% of the selling price.
Margin vs. markup
Margin and markup describe the same profit from different starting points. Margin compares profit with selling price; markup compares profit with cost. As a result, equal percentage values do not mean the same thing. See the margin vs. markup guide for a fuller comparison.
Profit margin example
If a product costs $80 and sells for $100:
- Profit = $20
- Profit margin = 20%
- Markup = 25%
Frequently asked questions
What is profit margin?
Profit margin is profit expressed as a percentage of selling price. It shows how much of each sales dollar remains after the direct cost of the item.
How do I calculate profit margin?
Subtract cost from selling price to find profit, divide profit by selling price, then multiply by 100.
How do I calculate selling price from margin?
Divide cost by one minus the target margin expressed as a decimal. For a 20% margin, divide cost by 0.80.
What is the difference between margin and markup?
Margin measures profit against selling price, while markup measures profit against cost. They describe the same profit using different bases.
Is a 20% margin the same as a 20% markup?
No. A 20% margin equals a 25% markup. A 20% markup equals a 16.67% margin.
Need to work from cost and markup instead? Return to the Markup Calculator.