DocomintProfit Margin Calculator
Calculate profit margin and markup percentage from revenue and cost.
What is a Profit Margin Calculator?
Margin and markup are both "profit as a percentage," but of different bases — margin is profit divided by revenue (what most people mean by "profit margin"), while markup is profit divided by cost (what most people mean when pricing an item over its cost). Mixing the two up is one of the most common pricing mistakes in small business, so this shows both side by side from the same two inputs.
How to use the Profit Margin Calculator
- Enter revenue and cost
- Press Calculate
- Profit, profit margin, and markup all appear instantly, calculated on your device
Formula
Margin = (Revenue − Cost) ÷ Revenue × 100 | Markup = (Revenue − Cost) ÷ Cost × 100
Margin measures profit as a share of what the customer paid (revenue); markup measures the same profit as a share of what it cost you — different denominators, different percentages, from the same sale.
Example
An item that costs $800 and sells for $1,200 has a $400 profit — a 33.3% profit margin (400/1200) but a 50% markup (400/800), two very different-looking numbers describing the exact same sale.
Common mistakes
- Using margin and markup interchangeably when pricing a product — the same $400 profit is a 33.3% margin but a 50% markup on an $800-cost, $1,200-revenue sale.
- Pricing at "cost plus desired margin%" directly (e.g. cost × 1.40 for a 40% margin) — that actually yields a lower margin than intended; the correct formula divides cost by (1 − target margin).
- Leaving indirect costs (shipping, payment processing fees, packaging) out of the "cost" figure, which overstates the true margin.
Frequently asked questions
What's the difference between margin and markup?
Margin is profit as a percentage of the selling price (revenue); markup is profit as a percentage of the cost. The same $400 profit on a $1,200-revenue, $800-cost sale is a 33.3% margin but a 50% markup — two different numbers describing the identical transaction.
How do I price a product to hit a target profit margin?
Divide the cost by (1 − target margin as a decimal). For a $50 cost item targeting a 40% margin: $50 / (1 − 0.40) = $83.33 selling price — pricing at cost plus 40% directly would actually give you a lower margin than intended.
What's a good profit margin for a small business?
It varies enormously by industry — retail and restaurants often run in the single digits to low teens, while software and services can run much higher, since typical cost structures differ so much between them. Compare against your specific industry's benchmarks rather than a universal number.
Does this include taxes or fees in the cost figure?
Only what you enter — the "cost" field is whatever number you provide, so include payment processing fees, shipping, and any other true cost of the sale in that figure for an accurate margin.
Is my numbers uploaded anywhere?
No — Profit Margin Calculator runs entirely in your browser using JavaScript/WebAssembly. Your numbers is never sent to a server.