Loading Calculator...
Please wait a moment
Please wait a moment
Calculate profit margin, markup, and return on investment. Understand the difference between margin and markup percentages.
Margin = % of selling price that is profit
Markup = % of cost that is profit
Margin is always less than markup for the same profit.
Enter selling price and cost to calculate
Example: Sell for $100, cost $60 → Margin = ($40 / $100) × 100 = 40%
Example: Same numbers → Markup = ($40 / $60) × 100 = 66.67%
Margin shows what percentage of revenue becomes profit. This is crucial for:
| Margin % | Markup % | Example (Cost $100) | Selling Price |
|---|---|---|---|
| 10.00% | 11.11% | $100 cost | $111.11 |
| 20.00% | 25.00% | $100 cost | $125.00 |
| 25.00% | 33.33% | $100 cost | $133.33 |
| 30.00% | 42.86% | $100 cost | $142.86 |
| 40.00% | 66.67% | $100 cost | $166.67 |
| 50.00% | 100.00% | $100 cost | $200.00 |
| 60.00% | 150.00% | $100 cost | $250.00 |
| 75.00% | 300.00% | $100 cost | $400.00 |
Profit margin is the percentage of selling price that represents profit. It shows how much of each dollar of revenue becomes profit. Formula: (Selling Price - Cost) / Selling Price × 100. A 40% margin means 40 cents of every dollar is profit.
Margin is profit as a percentage of selling price, while markup is profit as a percentage of cost. For the same dollar profit, margin is always lower than markup. Example: $40 profit on $60 cost sold for $100 = 40% margin but 66.67% markup.
Selling Price = Cost / (1 - Margin% / 100). For example, if cost is $75 and you want 40% margin: $75 / (1 - 0.40) = $75 / 0.60 = $125 selling price.
This varies widely by industry. Software companies often have 80%+ margins, retail typically 20-50%, restaurants 3-5%, and grocery stores 1-3%. Compare to your industry average and consider your business model.
Yes, if you sell below cost, you have a negative margin (a loss). For example, selling for $80 what cost $100 gives a -25% margin. This might be done for clearance sales or loss leaders.
Gross margin only considers direct costs (cost of goods sold), while net profit margin includes all expenses (operating costs, taxes, etc.). Gross margin is always higher. Both use the same formula structure but different cost bases.
Four main ways: (1) Increase prices without losing too many customers, (2) Reduce costs through better sourcing or efficiency, (3) Change your product mix toward higher-margin items, (4) Add value to justify premium pricing.
Margin is better for financial analysis because it relates directly to revenue. It answers "what percentage of our sales is profit?" which is more meaningful for business decisions, investor relations, and financial statements than markup.