Last updated March 2026

Margin Calculator

Q: What is the difference between margin and markup?

Margin is the percentage of the selling price that is profit (Profit / Revenue × 100). Markup is the percentage added to the cost to get the selling price (Profit / Cost × 100). A 50% markup on a $10 item means selling at $15, while a 50% margin means selling at $20.

Q: What is a good profit margin?

A good profit margin varies by industry. Retail typically operates at 2-5% net margin, while software companies can achieve 20-40%+. Gross margins are higher, typically 30-70% depending on the industry. Compare your margin to your specific industry benchmarks.

Calculate profit margin, markup, and revenue from cost and selling price.

Cost Price ($)

Selling Price ($)

Profit Margin 0%

Markup 0%

Profit $0

Cost $0

Revenue $0

Calculate from Margin or Markup

Cost ($)

Desired Margin (%)

Required Selling Price $0

Equivalent Markup 0%

Understanding Profit Margin

Profit margin is one of the most important metrics in business. It measures how much of each dollar of revenue a company keeps as profit after paying for the cost of goods sold. A higher margin means the business retains more money from each sale, which can be used for operating expenses, growth, and profit distribution.

Profit Margin = ((Revenue - Cost) / Revenue) × 100

For example, if you sell a product for $100 and it costs you $60 to produce or purchase, your profit is $40 and your profit margin is 40%. This means 40 cents of every dollar in revenue is profit.

Margin vs Markup: Key Difference

While margin and markup both measure profitability, they use different base values. Margin is calculated as a percentage of the selling price (revenue), while markup is calculated as a percentage of the cost. This distinction is crucial for pricing decisions.

Margin = Profit / Revenue × 100

Markup = Profit / Cost × 100

A product costing $60 sold for $100 has a 40% margin but a 66.7% markup. Margin is always lower than markup for the same transaction because the divisor (revenue) is larger than the cost. A common mistake in pricing is confusing the two, which can significantly affect profitability.

Common Margin-to-Markup Conversions

15% margin = 17.6% markup
20% margin = 25% markup
25% margin = 33.3% markup
30% margin = 42.9% markup
40% margin = 66.7% markup
50% margin = 100% markup

What Is a Good Profit Margin?

Profit margins vary widely by industry. Grocery stores operate on very thin margins of 1-3%, while software companies may achieve 60-80% gross margins. The key is to compare your margin against industry benchmarks rather than an absolute standard. Here are typical gross margin ranges by sector:

Retail/E-commerce: 25-50% gross margin
Manufacturing: 25-35% gross margin
Food service: 60-70% gross margin (on food items)
Software/SaaS: 70-85% gross margin
Consulting/Services: 50-75% gross margin

Frequently Asked Questions

What is the difference between margin and markup?

Margin is profit as a percentage of revenue (selling price), while markup is profit as a percentage of cost. If a $10 item sells for $15, the margin is 33.3% ($5/$15) but the markup is 50% ($5/$10). Margin can never exceed 100%, but markup can be any positive percentage.

How do you calculate profit margin?

Profit Margin = ((Revenue - Cost) / Revenue) × 100. For example, selling at $100 with a $60 cost gives you (($100 - $60) / $100) × 100 = 40% profit margin.

What is a good profit margin?

It depends heavily on the industry. Grocery retail operates at 1-3% net margin, while SaaS companies often achieve 20-40%+ net margins. Compare your margins to your specific industry benchmarks for a meaningful assessment.

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