How to use the profit margin calculator
- Find margin: enter your cost per item and selling price. You'll see gross profit, margin and markup.
- Price for a margin: enter your cost and the margin you want, and the calculator gives you the price to charge.
Profit margin formula
Gross profit = Selling price − Cost
Profit margin = Gross profit ÷ Selling price × 100
Margin tells you how much of every sale you keep after paying for the item itself. A 35% margin means you keep 35 cents of every dollar, pound or euro a customer pays.
To find the price that gives the margin you want:
Selling price = Cost ÷ (1 − Target margin ÷ 100)
Worked example
You buy a desk lamp for 65 including delivery and sell it for 100.
Profit = 100 − 65 = 35. Margin = 35 ÷ 100 × 100 = 35%. Markup = 35 ÷ 65 × 100 = 53.85%.
For a 40% margin, you'd charge 65 ÷ (1 − 0.40) = 108.33.
Margin vs markup
Both use the same profit, but margin divides by the price and markup divides by the cost, so markup is always the bigger number.
| Markup on cost | Profit margin |
|---|---|
| 25% | 20% |
| 50% | 33.33% |
| 100% | 50% |
| 150% | 60% |
| 300% | 75% |
Gross margin isn't take-home profit
This is gross margin: price minus the direct cost of the item. Marketplace and payment fees, advertising, returns, software and your own time all come out of it. Treat gross margin as the most you could keep, then subtract your other costs.
Frequently asked questions
What is a good profit margin?
It depends on the industry. Resellers of everyday goods often run thin margins and rely on volume, while digital products and services can carry much higher margins because each extra sale costs little. Compare yourself with businesses that sell similar things in a similar way.
Can profit margin be more than 100%?
No. Profit can never exceed the price, so margin stays below 100%. Markup can be any size; a 300% markup is common for some products.
Should the selling price include sales tax, VAT or GST?
No. Use the price without tax, because the tax you collect belongs to the government, not to you.
Formulas checked 29 October 2026. This calculator is for planning and education, not financial, tax or legal advice.