Profit Margin Calculator
Calculate profit margin in seconds. Enter your cost and your selling price (revenue) to instantly see your profit margin percentage, gross profit, and markup percentage — using the standard margin = (revenue − cost) / revenue × 100 formula.
ToolsSoup's Profit Margin Calculator shows how much of every sale you actually keep as profit. Enter what an item costs you and the price you sell it for, and you instantly see your profit margin as a percentage, your gross profit per unit, and your markup percentage. It uses the standard formula margin = (revenue − cost) / revenue × 100, so the numbers match what your accountant, your spreadsheet, and your investors expect. Use it to price products, set discounts that still leave a margin, or sanity-check a deal before you commit. Everything runs in your browser: no uploads, no sign-up, and your figures never leave your device.
What is profit margin?
Profit margin is the share of your revenue that is left over as profit after you subtract the cost, expressed as a percentage. If you sell something for $100 that cost you $40, your gross profit is $60 and your profit margin is 60%. Because margin is measured against revenue, it answers the question "out of every dollar I take in, how much do I keep?" It is one of the clearest signals of how healthy and sustainable your pricing is, and it lets you compare products, services, and whole businesses on the same scale regardless of size.
How to calculate profit margin
Profit margin needs just two numbers, and this tool does the math automatically as you type:
- Enter your cost — what it costs you to make or buy the item.
- Enter your revenue — the price you sell it for.
- Read your profit margin, gross profit, and markup below.
What is the profit margin formula?
The formula is margin = (revenue − cost) / revenue × 100. First find your gross profit by subtracting the cost from the revenue, then divide that profit by the revenue and multiply by 100 to get a percentage. For example, a product that costs $40 and sells for $100 has a gross profit of $60, and $60 ÷ $100 = 0.60, or a 60% profit margin. If the cost is higher than the revenue, the margin is negative, which means you are selling at a loss.
Margin vs. markup: what's the difference?
Margin and markup use the same gross profit but divide it by different numbers, so they are never equal. Margin is profit as a percentage of the selling price (profit / revenue), while markup is profit as a percentage of the cost (profit / cost). For a $40 cost sold at $100, the margin is 60% but the markup is 150%, because $60 of profit is 150% of the $40 cost. Confusing the two is a common pricing mistake — this calculator shows both so you always know which one you are quoting.
Why use this profit margin calculator?
- Instantly shows your profit margin percentage, gross profit, and markup from just cost and revenue.
- Uses the standard margin = (revenue − cost) / revenue × 100 formula businesses and accountants expect.
- Reports markup alongside margin so you never confuse the two when setting prices.
- Handles losses cleanly, showing a negative margin and negative profit when cost exceeds revenue.
- Updates live as you type, runs entirely in your browser, and is 100% free with no ads or sign-up.
Frequently asked questions
How do I calculate profit margin?
Subtract your cost from your revenue to get gross profit, divide that profit by the revenue, and multiply by 100 to get a percentage. Enter your cost and selling price above and the calculator returns the margin, gross profit, and markup instantly.
What is the profit margin if cost is $40 and the price is $100?
Gross profit is $60, and $60 ÷ $100 = 0.60, so the profit margin is 60% and the markup is 150%. Change either field above to model your own cost and price.
What is the difference between margin and markup?
Margin is profit divided by the selling price, while markup is profit divided by the cost. For a $40 cost sold at $100, the margin is 60% but the markup is 150%. They use the same profit but different denominators, so they are never the same number.
What is a good profit margin?
It varies widely by industry. As rough benchmarks, a net margin around 10% is often considered average, 20% or more is strong, and 5% or less is thin. Grocery and retail typically run on low single-digit margins, while software and services can exceed 50%. Compare your margin to others in your own field rather than to a universal number.
Can profit margin be negative?
Yes. If your cost is higher than your revenue, your gross profit is negative, so the margin is negative too. This calculator shows both the negative margin and the negative profit so you can see exactly how much you are losing per sale.