Why use Profit Margin Calculator
Margin and markup describe the same profit against different bases. Margin is profit divided by the selling price; markup is profit divided by the cost. Buy at 600 and sell at 1,000 and the profit is 400, which is a 40% margin and a 66.67% markup. This calculator shows both figures for any cost and price, scales revenue, cost and profit across the number of units sold, and works backwards from a target margin to the selling price that delivers it. It also flags a sale below cost. All figures are gross: they cover the direct cost you enter and nothing else.
Margin to markup chart: the selling price for each target margin
Each row is the calculator's target margin result for a cost of 100. Multiply your own cost by the last column to get the price for that margin.
| Target margin | Equivalent markup | Selling price on a cost of 100 | Multiply cost by |
|---|---|---|---|
| 10% | 11.11% | 111.11 | 1.1111 |
| 15% | 17.65% | 117.65 | 1.1765 |
| 20% | 25% | 125.00 | 1.25 |
| 25% | 33.33% | 133.33 | 1.3333 |
| 30% | 42.86% | 142.86 | 1.4286 |
| 35% | 53.85% | 153.85 | 1.5385 |
| 40% | 66.67% | 166.67 | 1.6667 |
| 45% | 81.82% | 181.82 | 1.8182 |
| 50% | 100% | 200.00 | 2 |
| 60% | 150% | 250.00 | 2.5 |
| 70% | 233.33% | 333.33 | 3.3333 |
| 75% | 300% | 400.00 | 4 |
| 80% | 400% | 500.00 | 5 |
Margin can never reach 100% while the cost is above zero, which is why the multiplier climbs so steeply past 70%.
Markup to margin chart: what a markup on cost really earns
If you price by adding a percentage to cost, this is the margin you end up with. Values are for a cost of 100.
| Markup on cost | Selling price | Gross profit | Resulting margin |
|---|---|---|---|
| 10% | 110.00 | 10.00 | 9.09% |
| 15% | 115.00 | 15.00 | 13.04% |
| 20% | 120.00 | 20.00 | 16.67% |
| 25% | 125.00 | 25.00 | 20% |
| 30% | 130.00 | 30.00 | 23.08% |
| 40% | 140.00 | 40.00 | 28.57% |
| 50% | 150.00 | 50.00 | 33.33% |
| 60% | 160.00 | 60.00 | 37.5% |
| 75% | 175.00 | 75.00 | 42.86% |
| 100% | 200.00 | 100.00 | 50% |
| 150% | 250.00 | 150.00 | 60% |
| 200% | 300.00 | 200.00 | 66.67% |
| 300% | 400.00 | 300.00 | 75% |
Margin, markup and target price formulas
Gross profit = Selling price − Cost Margin % = Gross profit ÷ Selling price × 100 Markup % = Gross profit ÷ Cost × 100 Price for a target margin = Cost ÷ (1 − Target margin ÷ 100)
The first three lines are what the Per unit panel reports. The last line is the target margin note: a cost of 18 with a 40% target gives 18 ÷ 0.60 = 30.00. The common mistake is to multiply the cost by 1.40 instead, which gives 25.20 and a margin of only 28.57%. Dividing by (1 − margin) is the only way to land on a margin exactly, because margin is measured against the price you have not set yet.
Worked examples: retail, wholesale and pricing to a target
Retail item sold in volume
Cost price 12.50, Selling price 19.99, Target margin 50%, Units sold 250
Gross profit 7.49, Profit margin 37.47%, Markup 59.92%. Across 250 units: Revenue 4,997.50, Total cost 3,125.00, Total profit 1,872.50. Price for a 50% margin: 25.00
A markup just under 60% looks healthy, yet the margin is below 40%. Reaching 50% would take a price of 25.00.
Wholesale order that falls short of the goal
Cost price 38, Selling price 55, Target margin 35%, Units sold 40
Gross profit 17.00, Profit margin 30.91%, Markup 44.74%. Across 40 units: Revenue 2,200.00, Total cost 1,520.00, Total profit 680.00. Price for a 35% margin: 58.46
Menu item priced from ingredient cost
Cost price 4.20, Selling price 12, Target margin 65%, Units sold 1800
Gross profit 7.80, Profit margin 65%, Markup 185.71%. Across 1,800 units: Revenue 21,600.00, Total cost 7,560.00, Total profit 14,040.00
The target price note returns 12.00, confirming the current price already sits exactly on a 65% margin.
Clearance price below cost
Cost price 80, Selling price 70, Units sold 10
Gross profit -10.00, Profit margin -14.29%, Markup -12.5%. Across 10 units: Total profit -100.00, with a Selling at a loss warning
What a discount does to your margin
A price cut comes straight out of profit, because the cost does not move. At a cost of 60 and a price of 100 the margin is 40%. Take 10% off the price and you sell at 90: profit drops from 40 to 30, the margin falls to 33.33%, and you need to sell a third more units just to earn the same total profit. Take 20% off and profit halves to 20, a 25% margin.
To test a promotion, enter the discounted figure as the Selling price and the expected volume in Units sold, then compare Total profit with the full-price run. The thinner the starting margin, the more a small discount hurts: at a 20% margin, a 10% price cut removes half of the profit on every sale.
Limits to know before you rely on the numbers
- It is a gross margin tool. Rent, wages, marketing, card fees, returns and tax are not deducted unless you fold them into the cost price yourself.
- It does not calculate net or operating margin, and it has no field for overheads.
- Target margin accepts values up to 99%. The price it suggests depends only on the cost, not on the selling price you typed.
- With a cost price of 0, markup is shown as 0% because a percentage of zero cost is undefined; margin shows 100%.
- Units sold is rounded down to a whole number, and one price is applied to every unit, so tiered or volume pricing needs a separate run per tier.
- Money amounts are plain numbers to two decimals with no currency symbol, so they work in any currency. Percentages are rounded to at most two decimals.
How to get your result
- 1
Enter the Cost price: what one unit costs you to buy or make, including freight, duty and packaging if you want them counted.
- 2
Enter the Selling price per unit, before sales tax, VAT or GST.
- 3
Read Gross profit, Profit margin and Markup in the Per unit panel.
- 4
Enter Units sold to see Revenue, Total cost and Total profit for a batch, an order or a month.
- 5
To price for a goal, type a percentage in Target margin (optional). A note shows the selling price per unit that reaches it at your cost.