Profit margin calculator
Enter your cost and selling price to see your gross margin, markup and profit. Add a target margin to find the price you need to charge.
Margin formulas
- Profit = price − cost
- Gross margin = profit ÷ price × 100
- Markup = profit ÷ cost × 100
- Price for a target margin = cost ÷ (1 − target margin ÷ 100)
Example
A print shop pays 12 to produce a poster and sells it for 30. Profit is 18, gross margin is 18 ÷ 30 = 60%, and markup is 18 ÷ 12 = 150%. To hit a 70% margin instead, the price would need to be 12 ÷ 0.3 = 40.
Why margin matters for pricing
Margin tells you how much of every sale you keep to cover overheads and profit. If your overheads are 25% of revenue and you want 15% profit, you need at least a 40% gross margin on what you sell. Use the target margin field to set prices that get you there, then check the equivalent markup.
When you are ready to bill, add your prices to the invoice generator. Your client only sees the selling price, not your cost or margin.
Frequently asked questions
How do I calculate profit margin?
Subtract cost from the selling price to get profit, then divide by the selling price. Selling for 100 with a cost of 60 gives 40 profit and a 40% margin.
How do I price for a target margin?
Divide the cost by 1 minus the margin. For a 40% margin on a cost of 60, the price is 60 ÷ 0.6 = 100.
Is gross margin the same as net margin?
No. Gross margin only subtracts the direct cost of what you sell. Net margin also subtracts overheads like rent, software and salaries, so it is always lower.
What is a good profit margin?
It varies widely by industry. Service businesses often have high gross margins; retailers and restaurants much lower. Compare with businesses like yours and make sure the margin covers your overheads.