Profit Margin Calculator
The Profit Margin Calculator computes both your profit margin (profit as a percent of revenue) and markup (profit as a percent of cost) — two related but different numbers business owners often confuse. Because margin is calculated on the larger selling-price base while markup is calculated on the smaller cost base, margin is always the lower of the two percentages whenever cost is greater than zero — and the gap between them widens as the numbers grow. This distinction matters most when setting prices: aiming for a 50% profit margin actually requires a 100% markup on cost, a mismatch that trips up even experienced business owners who use the two terms interchangeably.
How This Tool Works
Enter your total revenue and total cost to instantly see your profit, profit margin, and markup percentage.
Formula & Method
Profit = revenue − cost. Margin (%) = profit ÷ revenue × 100. Markup (%) = profit ÷ cost × 100.
Example Calculation
Suppose a consulting project bills $2,500 to the client and costs $1,800 in labor and expenses to deliver. Profit is $2,500 − $1,800 = $700. Divide that profit by revenue to get profit margin: $700 ÷ $2,500 = 28%. Divide the same $700 profit by cost instead to get markup: $700 ÷ $1,800 = 38.9%. Both percentages describe the identical $700 profit — margin tells you it's 28% of what the client paid, while markup tells you it's 38.9% on top of what it cost you to deliver.
Frequently Asked Questions
What's the difference between margin and markup?+
Margin is profit as a percent of the selling price (revenue), while markup is profit as a percent of your cost. They're calculated from the same numbers but always give different percentages.
What is a good profit margin?+
It varies widely by industry — retail often runs 20–50%, while software and services can run much higher. Compare against industry benchmarks for context.
Should I price based on margin or markup?+
Many businesses set prices using markup (cost + a percentage) but then track performance using margin, since margin better reflects overall profitability against revenue.
How do I convert a margin percentage into a markup percentage?+
Use the formula markup% = margin% ÷ (100 − margin%) × 100. For example, a 25% profit margin converts to a 33.3% markup, because a 25% margin means cost is 75% of revenue, and $0.25 profit ÷ $0.75 cost = 33.3%.
Can profit margin be negative?+
Yes — if your cost exceeds your revenue, profit comes out negative, and margin becomes negative too, meaning the sale lost money rather than made it. Markup is negative in the same situation, since it's calculated from that same negative profit divided by cost.
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<a href="https://everyfix.net/tools/profit-margin-calculator/">Profit Margin Calculator</a> by <a href="https://everyfix.net">EveryFix</a>Related Tools
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