Blog › Profit Margin Calculator guide
How to Calculate Profit Margin
Margin is the number that decides whether your business actually makes money or just stays busy. Confusing margin with markup underprices everything you sell. This guide gives you the formula, a worked example, and the calculator — so every price you set from now on is set on purpose.
Step by step
- Open the Profit Margin Calculator.
- Enter the cost (what the product or job costs you, all-in).
- Enter the selling price (revenue).
- Read your profit amount, your margin percent and your markup percent.
Try it now — free, no sign-up
Open the Profit Margin Calculator tool
Open the Profit Margin Calculator tool
Tips for better results
- Margin is profit divided by PRICE; markup is profit divided by COST. Same profit, different percentages — quoting the wrong one in negotiations costs real money.
- Include ALL costs in 'cost': materials, labor, shipping, fees. A margin built on partial costs is fiction.
- Set a minimum margin per product line and check it monthly — costs creep, prices must follow.
Frequently asked questions
What is the profit margin formula?
Margin % = (Price − Cost) ÷ Price × 100. Example: cost $40, price $75 → profit $35, margin 35 ÷ 75 = 46.7%.
What is a good profit margin?
It varies by industry: many services target 30-50% gross margin, retail often 20-40%, restaurants run thin at 5-15%. Your own costs and volume decide what 'good' must be.
Margin vs markup — which should I use?
Use margin to judge business health (it matches your accounts), markup to set prices from cost. The calculator shows both so you never mix them up.