Business

Profit Margin Calculator

Compare cost and selling price, calculate gross profit, margin and markup, test nearby pricing scenarios, visualize the revenue split, and export a professional PDF summary.

Cost Selling price / revenue

Gross profit$0.00

Gross margin0%

Markup0%

Revenue composition

Cost and gross profit split

Cost Gross profit

Scenario	Selling price	Gross profit	Margin	Markup

Decision view

Revenue, cost, and gross-profit bridge

Selling price is reconciled into entered cost and gross profit while margin and markup keep their denominators explicit.

Entered selling price$0.00

CostGross profit

Entered cost$0.00

Gross profit$0.00

Revenue$0.00

Margin on revenue0%

Markup on cost0%

How to use Profit Margin Calculator

Enter cost and selling price using the same unit basis—both per item or both for the same batch.
Reconcile revenue minus cost to gross profit, then compare margin on revenue with markup on cost.
Use the price-scenario table to see how discounting or repricing changes both percentages.
Add omitted direct costs and overhead separately before treating gross profit as business profit.

Calculator guide

Understanding Profit Margin Calculator

Gross profit, margin, and markup describe the same transaction from different reference values. Margin uses revenue as the denominator, while markup uses cost, so the percentages are not interchangeable.

Cost The direct cost assigned to one unit or transaction.

Revenue The selling price or sales amount before subtracting cost.

Margin Gross profit expressed as a percentage of revenue.

Markup Gross profit expressed as a percentage of cost.

Calculation method

How the calculation works

Gross margin = (revenue - cost) / revenue x 100; markup = (revenue - cost) / cost x 100. Subtract cost from revenue to find gross profit. Divide profit by revenue for margin, or divide profit by cost for markup, then multiply by 100.

Denominator discipline

Why margin and markup are different

Both percentages use the same gross profit numerator but divide by different reference values.

Margin Profit ÷ revenue. It answers what share of sales remains after entered cost.

Markup Profit ÷ cost. It answers how much was added relative to the cost base.

50% markup A cost of 60 with 50% markup produces a price of 90 and a margin of 33.33%.

50% margin A cost of 60 requires a price of 120 because cost consumes the other half of revenue.

Cost scope

Building a decision-ready cost number

The calculator is exact for the values entered, but the business meaning depends on which costs are included.

Direct product cost Purchase or production cost directly attributable to the sale.

Transaction cost Marketplace, payment, fulfillment, and sales commissions may reduce realized margin.

Returns and discounts Expected reductions in revenue should be reflected before relying on a target margin.

Operating overhead Rent, salaries, software, tax, and financing can remain after gross profit and must be assessed separately.

Use the same accounting definition across products and periods before comparing margins.

Worked situations

Practical examples

Check the gross margin on a product before listing it.
Compare margin and markup, which use different denominator values.
Test how several selling prices change profit per unit.

Better inputs

Useful tips

Use consistent per-unit or total values for both cost and revenue.
Include all direct costs needed for the comparison.
Test multiple selling prices before choosing a target margin.

Before relying on the result

Limitations and common mistakes

Gross profit does not include operating expenses, tax, financing, or overhead unless entered as cost.
Zero cost makes markup undefined.
Discounts, returns, and sales tax can change realized revenue.

Reference

Key terms

Revenue: Income from the sale before cost is deducted.
Gross profit: Revenue minus direct cost.
Margin: Gross profit divided by revenue.
Markup: Gross profit divided by cost.

Important note

Calculated from the entered values using the displayed accounting method. Reconcile material decisions with source records and applicable accounting policy.

Frequently asked questions

What is the difference between margin and markup?

Margin divides profit by revenue, while markup divides profit by cost.

Can margin exceed 100%?

A conventional positive-cost sale cannot have gross margin above 100%, although unusual negative-cost situations require separate interpretation.

Does gross margin include overhead?

Only if those overhead amounts have been included in the cost entered.

Why is markup higher than margin for the same sale?

Markup divides the same profit by the smaller cost base rather than by revenue.