Profit Margin Calculator converts revenue and cost into profit, margin percentage, and markup percentage. It helps pricing, ecommerce, services, and startup planning by separating how much money is left after cost from how strongly the price is marked up over cost. Use it for gross-margin checks and pricing scenarios; full profitability still depends on overhead, taxes, refunds, payment fees, and delivery costs.
Enter values in the left panel, keep units explicit, run the calculation, then copy or share the result. Invalid fields are highlighted immediately.
How to use this tool
Enter revenue and the cost associated with that revenue.
Use the same scope for both inputs, such as one unit, one order, one month, or one project.
Run the calculator and review profit, margin percentage, and markup percentage.
Rerun with alternative prices or costs to see how sensitive the margin is before changing a quote or target.
Profit Inputs
Result
Profit: $3,000.00
Margin %: 30.00
Markup %: 42.86
Formula or method
Profit is calculated as `revenue - cost`.
Margin percentage is `profit / revenue`, which shows the share of revenue retained after cost.
Markup percentage is `profit / cost`, which shows how far the selling price sits above the cost base.
Worked example
Checking a product price
{"Revenue"=>"$120"}
{"Cost"=>"$72"}
Result: Profit is $48, margin is 40%, and markup is 66.67%.
Margin and markup are both valid metrics, but they answer different questions. Margin describes retained revenue; markup describes price relative to cost.
How to interpret the result
Margin and markup explain different parts of pricing. Read the labels carefully before sharing a target or quote.
Higher margin means more room for overhead, discounts, refunds, taxes, and profit, but only if the cost input includes the relevant variable costs.
Markup is usually larger than margin for the same transaction, so label the metric clearly when sharing pricing decisions.
Compare margin by product, service line, or customer segment instead of relying only on blended company-level averages.
Common mistakes
Calling markup "margin" or using markup targets when a margin target was intended.
Entering only direct material cost while ignoring payment fees, fulfillment, support, returns, or contractor time.
Comparing unit margin with monthly overhead without matching the time period or sales volume.
Review note and limitations
The calculations use standard gross profit, margin, and markup formulas used in pricing and unit-economics analysis.
Does not model demand response, overhead allocation, taxes, refunds, payment timing, or accounting treatment.
Not a complete profitability model.
Educational estimate only. It does not replace accounting review, tax advice, or a complete profitability model.
FAQ
What is the difference between margin and markup?
Margin divides profit by revenue. Markup divides profit by cost. A product sold for $120 with $72 cost has 40% margin and 66.67% markup.
Should cost include overhead?
Include the cost level that matches your decision. For gross margin, use direct cost of goods or delivery. For net profitability, include overhead and operating costs elsewhere in the model.
Why does my markup look higher than my margin?
The denominator is different. Markup uses cost as the base, while margin uses revenue as the base, so markup is typically the larger percentage.
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