Free tools · eCommerce
Profit Margin Calculator
Compare profit margin and markup from your price and cost.
YOUR RESULT
Ready when you are.
Enter your own values and use the button to see the result.
Runs on your device. No sign-in and no data upload.
How this tool works
Profit = price − cost. Margin = profit ÷ price × 100. Markup = profit ÷ cost × 100.
Understand the result
Profit here is only relative to the cost you enter. Include the relevant costs for your purpose. Margin and markup are different percentages; neither estimates demand or future earnings.
How to use the Profit Margin Calculator
- Enter your selling price. The price the customer pays for that unit, before any tax you collect on behalf of the government.
- Enter your total cost per unit. This is what one unit costs you to buy or make — supplier price, materials, packaging and inbound shipping.
- Press Calculate. The tool shows your profit per unit, your margin as a percentage of the price, and your markup as a percentage of the cost.
The formulas
Profit = Selling price − Cost
Margin % = Profit ÷ Selling price × 100
Markup % = Profit ÷ Cost × 100
Margin vs markup — the difference that trips people up
Margin and markup use the same profit figure but divide by different numbers. Margin divides by the selling price; markup divides by the cost. That is why they are never equal.
Example: you buy a handbag for $20 and sell it for $50. Profit is $30. Margin = 30 ÷ 50 = 60%. Markup = 30 ÷ 20 = 150%. If you tell a supplier you want “a 60% margin” but calculate a 60% markup instead, you would price the bag at $32 instead of $50 — a big difference.
Worked examples
- Perfume: cost PKR 1,800, price PKR 4,500. Profit PKR 2,700. Margin 60%, markup 150%.
- Electronics accessory: cost $12, price $19.99. Profit $7.99. Margin 40%, markup 67%.
- Service package: your time and tools cost $300, price $750. Profit $450. Margin 60%, markup 150%.
Working backwards: what price do I need?
If you know the margin you want, use: Price = Cost ÷ (1 − Target margin). For a $15 cost and a 50% target margin, price = 15 ÷ 0.5 = $30. For a 65% target, price = 15 ÷ 0.35 ≈ $42.86.
What margin should an online store aim for?
Margins vary widely by industry, but stores that rely on paid ads usually need healthy gross margins because ad spend comes out of that profit. As a rule of thumb, products with a margin below about 30% are hard to advertise profitably. Check your numbers with the break-even ROAS calculator before launching a campaign.
Costs people often forget
- Payment gateway or COD handling fees
- Packaging and printed inserts
- Free shipping you offer to customers
- Returns, damaged items and refunds
- Marketplace or app fees charged per order
Add these to your cost figure for a more realistic margin.
Frequently asked questions
Is gross margin the same as net profit?
No. This calculator gives gross margin per unit. Net profit also subtracts overheads such as rent, salaries, software and advertising.
Can margin be more than 100%?
No. Margin can approach 100% but never exceed it, because profit can never be larger than the price. Markup, however, can be any size.