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Profit Margin Calculator

Work out the gross margin and markup on a product from its cost and price, or find the price you need to hit a target margin, without mixing up the two.

Calculate

38.46%Gross profit margin

Profit per unit$25.00
Markup on cost62.5%
Margin on price38.46%

Margin is profit ÷ price; markup is profit ÷ cost. A 50% markup is only a 33.3% margin.

How this calculator works

Gross margin = (price − cost) ÷ price. It is profit as a share of the selling price.

Markup = (price − cost) ÷ cost. It is profit as a share of the cost.

To hit a target margin, price = cost ÷ (1 − margin). For a 35% margin on a $40 cost: $40 ÷ 0.65 = $61.54.

Margins on price can never reach 100%; markups can be any size.

Worked example

Cost $40, price $65

  1. Profit: $25.
  2. Margin: $25 ÷ $65 = 38.46%.
  3. Markup: $25 ÷ $40 = 62.5%.

Questions people ask

Why are margin and markup different?

They divide the same profit by different numbers. A 50% markup is only a 33.3% margin.

What is a good profit margin?

It varies by industry: grocery margins are thin, while software and luxury goods are high. Compare with businesses like yours.

Gross or net margin?

This calculates gross margin per item. Net margin also subtracts overhead, salaries and taxes.

How do discounts affect margin?

A lot: a 20% discount on a product with a 40% margin cuts profit per unit in half.

Last reviewed October 2, 2026